Estate Planning With a Family Cottage in British Columbia

A retired couple in West Vancouver had a Salt Spring Island cottage they had owned since 1991. The husband's will left it to his older daughter from a first marriage; everything else went to his current wife. He died in 2024. The cottage's deemed disposition triggered approximately $245,000 of capital gains tax. The cottage attracted approximately $24,000 of BC probate fee. And his daughter from the first marriage faced a wills variation claim from her stepmother under WESA section 60, on the basis that the cottage represented a material portion of the marital estate and the wife had been inadequately provided for. The claim ran through a year of litigation and settled with the daughter paying her stepmother approximately $400,000 in exchange for retaining the cottage.

This is the BC cottage estate-planning problem in compressed form. The capital gains rules are federal; the wills variation regime is uniquely BC; the probate fee is among the highest in Canada. Planning that works in Ontario does not always work in BC, and BC families need to think about three problem layers rather than two.

For the federal framework, see our companion piece on estate planning with a family cottage in Ontario, which covers the deemed disposition and principal residence exemption mechanics that also apply in BC. For the broader frame, see our pillar on estate planning in Canada.

The federal layer — same as Ontario #

The Income Tax Act section 70(5) deemed disposition rule applies identically in BC.^[1] A BC cottage with $800,000 of accrued capital gain triggers approximately $400,000 of taxable capital gain, of which approximately $200,000 is tax at the top BC marginal rate (the top combined federal-BC rate is approximately 53.5%, producing an effective capital gains rate of approximately 26.75% on the taxable portion).

The principal residence exemption is also federal and identical to Ontario. A BC family can designate the cottage as principal residence for any year it was ordinarily inhabited.^[5] The per-year comparison between the Vancouver home and the Salt Spring cabin is the standard planning analysis.

The spousal rollover under section 70(6) is also federal and unchanged. A cottage left to a surviving spouse passes tax-deferred, with the gain crystallising on the spouse's eventual death or disposition.

The BC probate fee — meaningfully higher than Ontario #

BC's Probate Fee Act sets a tiered fee: nil on estates under $25,000, $6 per $1,000 on the portion between $25,000 and $50,000, and $14 per $1,000 on the portion above $50,000.^[3]

For a $1.5 million BC estate, the probate fee is approximately $20,450 (compared with Ontario's roughly $21,750 on the same estate value — the two provinces are broadly comparable in absolute dollars on mid-range estates, with BC's fee higher on smaller estates and Ontario's slightly higher on larger ones).

Probate-avoidance strategies in BC track the strategies elsewhere — beneficiary designations on RRSPs, RRIFs, TFSAs, and life insurance; joint tenancy with right of survivorship; payable-on-death designations on bank accounts; inter vivos trusts — but each has trade-offs that are specifically BC-flavoured.

The wills variation regime — uniquely BC #

The most BC-specific issue is wills variation. WESA section 60 allows a spouse or child of the deceased to apply to court for an order varying the will if it has not made "adequate provision for the proper maintenance and support" of the applicant.^[2]

BC courts have applied the variation jurisdiction more aggressively than any other Canadian province. The leading Supreme Court of Canada decision, Tataryn v. Tataryn Estate (1994), held that BC courts in applying the wills variation regime should consider both legal obligations (spousal property entitlements, dependent-relief obligations) and moral obligations (the reasonable expectations of a long-term spouse or independent adult child). The moral-obligations branch is particularly broad.

For BC cottage planning, the wills variation regime creates two concrete risks.

First, second-marriage cottage estates. A cottage left to children from a first marriage with a current spouse receiving the residue is the classic setup for a wills variation claim. The current spouse, particularly if the marriage was long, often has a strong moral claim under Tataryn even where they have substantial separate property. The cottage's emotional value rarely matches its legal allocation.

Second, single-child cottage bequests. Leaving the cottage to one child and providing nothing or substantially less to others can attract a variation claim from the under-provided children. Adult independent children have weaker claims than spouses but can still succeed, particularly if the disparity is large and the family relationship was reasonably warm during the deceased's lifetime.

BC families generally need to address the wills variation risk explicitly in cottage planning. Tools include equalisation through life insurance to non-cottage children, an explicit memorandum of reasons in the will explaining the rationale for the cottage bequest (admissible as evidence of the deceased's intentions), and in second-marriage scenarios, a separate inter vivos transfer or trust structure to take the cottage out of the wills variation pool entirely.

The Land Owner Transparency Registry #

The Land Owner Transparency Act (LOTA) took effect November 30, 2020, and requires disclosure of beneficial ownership for any BC land held in a relevant trust, partnership, or corporation.^[4] The Land Owner Transparency Registry (LOTR) is publicly searchable.

For cottage planning, LOTA materially affects two structures.

Cottage trusts. A BC cottage held in an inter vivos trust must report the trust's beneficiaries to LOTR. The reporting is ongoing — changes in beneficiaries trigger updated filings. The privacy benefit historically associated with cottage trusts (the trust's beneficiaries were not publicly visible) is gone. Cottage trusts remain useful for tax and governance reasons but the LOTR exposure is a meaningful new burden.

Corporate ownership of cottages. A cottage held in a corporation must report the corporation's controlling individuals to LOTR. Most family cottages should not be in corporations because of integration tax cost and lack of principal residence exemption availability, but corporate ownership is sometimes used for commercial vacation properties.

Direct ownership by individuals (joint tenancy with spouses or with adult children, or sole ownership) does not trigger LOTR reporting. The simplification is real and is one of the reasons LOTA effectively pushed BC families back toward direct ownership models.

BC-specific tools #

Some planning tools work specifically well in BC.

WESA section 58 curative provision. BC's WESA allows a court to validate a will or part of a will that does not meet the standard formal requirements (signed, two witnesses, etc.) if the court is satisfied the document represents the deceased's testamentary intentions. This is uniquely permissive among Canadian provinces and has been used to validate handwritten memos, emails, and other informal documents. It is not a substitute for proper will-drafting but it can rescue some family situations where a formal will was not signed before death.

The Alter Ego Trust and the Joint Spousal Trust. These are Income Tax Act section 73(1) trusts available to settlors aged 65 or over (alter ego) or to couples both aged 65+ (joint spousal). The settlor transfers property to the trust on a tax-deferred basis, the property passes outside the estate at death, and the 21-year deemed disposition rule does not apply during the settlor's life. For BC residents this combines tax deferral, probate avoidance, and protection against wills variation (since the property is no longer part of the estate). Useful for older BC cottage owners who can fund the trust during life.

Joint tenancy with spouse. A BC cottage held by spouses as joint tenants with right of survivorship passes by survivorship outside the estate on the first death, avoiding probate fee on the cottage's value. The federal spousal rollover still applies for tax purposes. Joint tenancy between spouses is generally non-controversial; joint tenancy with adult children carries the Pecore v. Pecore presumption problems noted in our Ontario cottage article.

Practical checklist for a BC cottage owner #

Document the adjusted cost base carefully. Original purchase price plus capital improvements over the years. Receipts for major improvements should be retained indefinitely.

Decide the PRE designation strategy during life so the family has the documentation ready. Compare per-year gain on the home versus the cottage and identify the years the cottage should win.

Consider joint-last-to-die life insurance if the cottage is to stay in family hands. The death benefit funds the cottage's deemed disposition tax and potentially equalises non-cottage children to reduce wills variation risk.

Address wills variation risk explicitly. If the cottage is going to one child or to children from a first marriage, document the rationale in the will and consider equalising through other assets. For high-risk situations, an inter vivos transfer or alter-ego trust during life can take the cottage out of the wills variation pool.

Update the will to specifically address the cottage. Identify who inherits, whether they have to compensate non-inheriting siblings, and how the executor is to source liquidity to pay the deemed disposition tax.

Check the Land Owner Transparency Registry if any non-direct ownership structure is contemplated — trust, partnership, or corporation. The reporting burden may shift the calculus toward direct ownership.

Talk to the family during life. BC's broad wills variation regime makes informal family alignment particularly valuable; a family that has talked through the cottage plan and accepted it is less likely to litigate.

What this means for your plan #

Two takeaways. First, BC cottage planning needs to address three problem layers — the federal capital gains tax, the BC probate fee, and the BC wills variation regime — where Ontario planning addresses only the first two. Second, BC-specific tools (the WESA section 58 curative provision, alter ego trusts) and the LOTR reporting burden together mean that BC cottage estate planning is genuinely different from cottage planning in other provinces, even though the federal tax framework is identical.

When clients build their estate plan with It's Simple Will, the Will Creator captures the cottage as a specific bequest separately from the residue and prompts BC users specifically on the wills variation considerations. For the federal mechanics, see our Ontario cottage piece and the pillar on estate planning in Canada.