Cottages often carry decades of memories—but they also carry big estate planning risks, especially as property values skyrocket. A recent Ontario decision, Haddock v. Haddock, shows how a well-meaning gift can turn into a major dispute.
In 2012, a mother left her cottage to one of her three adult children. Her will said the appraised value of the cottage should be deducted from his share of the estate so that all children were treated equally.
She passed away in 2022. The problem?
- The cottage was appraised at $1,375,000
- The son’s one-third share of the estate residue was $265,562.88
The son argued he should receive the cottage and only have his share reduced up to its value, with no obligation to cover the shortfall. His siblings argued the will required the full value to be deducted—otherwise the gift failed.
How the Court Interpreted the Will
The Court applied the modern approach to will interpretation from Ross v. Canada Trust Company: read the will as a whole, consider the surrounding circumstances, and avoid rewriting the will.
The Court found:
- The cottage gift was conditional
- The son had to cover the entire appraised value
- There was no cap limiting the deduction to his one-third share
- The mother’s clear intention was equal treatment of her children—not a windfall caused by dramatic market increases
The Court ordered the son to pay about $641,937 to make the gift effective. If he cannot pay within 60 days, the gift lapses and the cottage must be sold.
Because the confusion stemmed from the dramatic, unforeseen increase in cottage value—not bad behaviour—the siblings received substantial indemnity costs from the estate. The son absorbed his own costs.
Estate Planning Tips for Cottage Owners
If you own a cottage, this case is a must-follow example. Here are key questions to ask:
Should the cottage gift be conditional or outright? Spell out whether a child must pay fair market value, or whether it’s an inheritance.
How should the cottage be valued? Set out when appraisals occur and whether one or multiple appraisals are required.
How will you keep things equal? Cottages often exceed liquid assets—consider equalization formulas or buy-out mechanisms.
Can your chosen beneficiary afford the cottage? If not, should payment plans or financing options be allowed? Who pays capital gains tax? This can significantly affect what each child ultimately receives.
Cottages are emotional and financially significant assets. Without clear instructions, they are one of the most litigated parts of Ontario estates. The Haddock decision is a reminder to plan proactively—so your family spends time at the cottage, not in court.
If you’d like help reviewing your estate plan or cottage provisions, we’d be happy to assist.
This blog post was written by Diana Tebby, a member of the Real Estate and Wills and Estates teams. She can be reached at 613-369-0384 or at diana.tebby@mannlawyers.com.
