Farm Transition Planning is essential as every farm will inevitably change ownership. As a farmer, it is crucial to plan for the future of your farm and your retirement, whatever it may look like. Whether you will be passing your farm on to the next generation or selling it to someone new, you need to research all your options.
Learn why it is so important to have a written farm transition plan from these real-life scenarios.
Brad Smith is a third-generation cattle farmer. He and his wife, Jennifer, have three children: Oliver, Dana, and Max. Their oldest son, Oliver, is an electrician, their daughter, Dana, is a veterinarian in a neighbouring community, and their son, Max, works on the farm full-time. Oliver and Dana have no interest in taking over the family farm, while Max does. Brad is happy that one of his kids wants to continue their family farm but worries about how he can make it fair to Oliver and Dana. Max is unable to purchase the farm from his father, but if Brad gives it to Max, his other two children will be short-changed.
“Brad should speak to a Wealth Advisor to discuss options on how to come up with some form of payment method to ensure all the kids get a fair share. Options for funding include saving up, borrowing the money, or buying Life insurance. Life insurance is always the most affordable and most efficient way.”
– Sapandeep Singh, Director of Wealth Management at Sunrise Wealth Management.
Harvey and Stacey Johnson have a small dairy farm. Their youngest son Wyatt used to work at a local tractor supply company after he graduated from university but quit a few years ago to work on the family farm full-time. Their oldest son, Kyle, works as an agronomist at the local Coop Agro-Centre and helps on the farm sometimes when he is free during seeding and harvest. It was never put on paper, but since Wyatt joined the farm full-time, it has been mentioned in passing that he will take over the farm.
After 40 years of operating the farm, Harvey has decided to step back and let the next generation take over. Wyatt is excited about taking over the farm since it is what he has been working towards. Assuming he is taking over the farm, Wyatt asks questions about the next steps. Harvey informs Wyatt that his brother, Kyle, has just purchased the farm.
Wyatt is confused and upset. Harvey explains that Kyle had the money to buy the farm outright and had secured a loan from the local credit union. Harvey explained that it seemed fair since Kyle had the money to purchase it, and Wyatt could still work for his brother. Wyatt’s feelings are hurt, and he states that he would have bought the farm with his brother had he been given the opportunity.
“Talking to an advisor before the sale would have helped them to find the most efficient way to sell/pass on the farm to both the kids. Their options could include partnering with a lender to find the right borrowing solutions, and/or helping the new farm owners with their own planning.”
– Sapandeep Singh, Director of Wealth Management at Sunrise Wealth Management.
Ian and Cheryl MacGregor operate a mid-sized grain and cattle farm. They have one child, Lindsay, a nurse at a local hospital. Her husband, Tony, is a teacher and does not come from a farming background.
Ian and Cheryl have always known that they likely would not pass their family farm down to Lindsay, as she has never shown an interest. Over time, Ian and Cheryl stress about selling their farm and don’t know where to start.
“A Wealth Advisor can work closely with your accountant in finding the most tax efficient way to sell the farm and make sure you are equipped with relevant information before you put the farm up for sale.”
– Sapandeep Singh, Director of Wealth Management at Sunrise Wealth Management.
SUNRISE CREDIT UNION'S FARM TRANSITION PROGRAM
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