A year from this December, Joan Kilgour, 76, gets to leave her daughter's Mississauga home and again have a place of her own. This time, however, it will be a 750-square-foot, one-bedroom (plus den) condominium in Hearthstone by the Bay, a new mature-adults-only building on Toronto's western waterfront.

Jean Stechyshyn, 84, found what she thinks is the perfect home a year ago. She bought a large one-bedroom condominium at the Village by the Arboretum, just south of the University of Guelph.

Hearthstone and the Village by the Arboretum are the first wave of a new form of real estate that not only provides home ownership but also an à la carte menu of support services designed to allow seniors to remain in their own homes for the rest of their lives.

But there is also another thing that ties the two together. They are able to afford a relatively worry-free old age because both had mortgage-free family homes to sell when the time came to choose where to spend the years remaining. That fully paid-up home translates into freedom of choice when it comes to retirement lifestyles, say the experts.

While real estate in general can play a huge role in a comfortable retirement, the family home is indeed the foundation stone for most people, adds Bruce Cumming of Cumming & Cumming Wealth Management of Oakville, Ont.

Mr. Cumming's reasoning starts with the strain already placed on provincial health care systems. He points out that up to three quarters of health-care spending already goes to people 65 and older.

The family home will be the last major asset to be sold, likely during the last 10 years of life to finance a home in an assisted-living community.

While owning a free-and-clear family home is a relatively straightforward proposition with few tax considerations, additional forms of real estate each carry with them both upsides and downsides, says Mr. Cumming.

Take the family cottage as an example. Unless care is taken in planning, children who inherit a family cottage could face a tax bill of nearly 25 per cent of the market value of the property.

Investment properties can often bear similar tax consequences and southern getaways are subject to U.S. state laws, which might demand heirs pay taxes on a property as if the value of that property was income in their hands in a single year.

Mr. Cumming says in the case of family cottages, the parents might consider either taking out a life insurance policy large enough to pay taxes due on their deaths or even take out a larger policy and create a family cottage trust.

On their deaths, there would not only be enough money to pay the taxes but also for an investment fund, the interest from which could pay all cottage operating costs.

In effect, he says, do not put too many eggs in a single basket. All forms of real estate -- whether they're residential, vacation, REITs or commercial -- tend to move together as a class. When the market drops, all real estate may drop at the same time.

"What I suggest is people look and examine what share of their total investments is attributable to their family home. Then make certain that what is left is widely diversified," he says.

"For me the secret to comfort has been the family home," says Mrs. Kilgour. She and her husband Bill sold their home in Guelph 10 years ago and paid cash for a place in a retirement community in St. Mary's, Ont. After her husband died two years ago, she sold that place, banked the proceeds and moved in with her daughter Barb Hildebrand.

This July she was able to pay for her new condo. "We looked at rental places but you have to pay about $3,500 a month in many of those places and all you get is a single room," says her daughter Barb.

Mrs. Stechyshyn's story is similar. She had lived in St. Catharines, Ont., for 65 years and owned a home there. When her husbanddied his pension died with him, she says. She needed a community that offered increasing levels of support to maintain her independence.

Happily, she says, she found Village by the Arboretum a year ago. The initial attraction was the proximity to a daughter who lives in nearby Rockwood.

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