Part of owning a farm is that connection to family and the dream that one day the ‘kids will take over’. But our modern Canadian agriculture industry means thinking differently and with so many career options available, resolving family disputes and planning for this change in ownership (and control) of the family farm has become essential.
At Thomson Schindle Green Insurance Company or Team TSG, we proudly offer the farm and ranch industry specialized products that simplify the purchasing of insurance, and as financial advisors, can help you build that comprehensive succession plan – especially if you are worried retirement, being disabled due to an accident or illness, or are questioning what happens to the family and the farm after you pass away.
By utilizing the do-nothing plan, survivors may face a tax liability and by simply leaving everything to your surviving spouse can put that person in a difficult position. Statistics Canada’s 2011 Census of Agriculture indicated that:
- Farm operators older than 55 made up 48.3 percent of farmers in 2011 compared to 40.7 percent in 2006.
- There were 213,265 male farmers (72.6 percent) and 80,665 female operators.
- Canada had 205,730 farms, down 10.3 percent (23,643 farms) from the previous 2006 census.
- Between 2006 and 2007, the average size of Canadian farms increased 6.9 percent from 728 acres to 778 acres.
Together these numbers indicate the changing trends in Canadian agriculture and reading between the lines, the importance of having s succession plan that includes:
- a summary of the overall plan;
- a business overview;
- a strategic plan with a description of the personal and business goals and expectations of family members;
- a retirement plan;
- a management, control and labour transfer plan;
- a financial plan;
- an action plan and implementation timetable; and
- supporting documentation.
This written plan can also include:
- a training and development plan for the successors;
- a communication plan; and
- a contingency plan.
At TSG Financial Ltd., we have a strong team of associates, with a great deal of experience in succession planning for business owners, and farm and ranch operations. As decisions are documented, the team of advisers reviews the plan and provides detailed feedback, advice, and comments. Once this occurs, the family should conduct a review, have a discussion, and make necessary modifications.
The goal is always to have farming children gradually take over the reins from their parents using the various legal and tax tools that are available. Initiating and then developing a plan is key. Without one, the wishes of the farm owners may not be achieved and, survivors may be saddled with crippling tax burdens. There are definite tax advantages to keeping a farm in the family and creating a legacy for future generations. When a farm is transferred to a child, grandchild, or child-in-law who continues to run the farm as a business, tax liabilities can be deferred indefinitely. No matter what you decide to do with your farm, you should start planning well in advance. Your succession planning should include consulting an expert in the tax implications of farm transfers like ours at Team TSG.
If you have insurance or financial questions for your business or farming operation, contact Thomson Schindle Green Insurance Company at 1-800-830-9423 to speak with one of our highly qualified representatives to receive a free quote or visit one of our offices in Bassano, Brooks, Calgary, Edmonton, and Medicine Hat today.