No matter what age, it’s never too early or late to put together a ten-year plan for your farm.
“Farmers are always busy with their daily and seasonal tasks,” says Rick Dehod, farm financial specialist, Alberta Agriculture and Forestry. “When asked what their plan is for the next 10 years, they often say they haven’t had a chance to work on it yet. Whether the next generation is ready to take over, or you are in the prime of your farming career, you need to ask yourself what the farm business will look like 10 years from now.”
In 2016, a new module was added to the Census of Agriculture regarding written succession plans. The results indicated that only 8.4 per cent of all operations have a written succession plan. Of those farm businesses that were family corporations and non-family corporations, 16.3 per cent had a succession plan. A succession plan is a written plan made by the main farm operators to transfer ownership, labour and control of the operation to another person.
“If you are 55 now, your life expectancy is possibly another 25 years. How long will you farm? How long will you physically and mentally be able to? If your desire is for the farm to continue, who is the successor, are you grooming them to be the next farm manager, and have you asked them if they want to? Is there a plan? Is so, is it written and who knows about it?”
If there is no successor, then what is the estate plan, asks Dehod. “Filing your income tax on a cash basis allows for the deferral of tax through the use of various strategies. But when you exit the business, this tax becomes due and payable, and the biggest beneficiary of your estate could be the Canada Revenue Agency. Do you want that? If you are in this category, maybe it’s a good time to develop an exit strategy that will minimize the tax you will pay as you wind down your farm business and you transfer assets into your estate. Is it time to talk to your accountant about this?”
If you have a successor, then what is the shared vision for the farm or ranch? “The vision is the shared image of the family’s definition of success and what the family wants the business and legacy to be. Having a clear vision allows the family to set goals and address the dreams of the family. This is critical to the success of the family, the individuals and to the farm business.”
Dehod says this discussion should start with a family meeting and asking some simple yet complex questions:
- What do we desire for our family, the founders, the successors, and those non-farm members?
- What will our family story and legacy be?
- What do we want for the next generation and possibly into the next?
- How will our family values influence our vision and where we want to go?
- What will we do and not do?
- How will the farm business be part of our family vision?
- Who is leading the farm business now and into the future, and how are they leading?
“Although the answers to these questions may not be clear cut, they can provide a good base for discussion and the start of a plan. These answers will also create an awareness for that 10-year plan and a go-forward framework on how the business will evolve. They will also provide clarity to all involved including those who no longer live on the farm.”
Source : Agriculture and Forestry