The 2016 Census of Agriculture indicated that only 1 in 12 operations reported having a formal succession plan laying out how the operation will be transferred to the next generation of Alberta farmers, with the average age of operators being 55.
The transfer of agricultural assets as farmers transition out of the sector can happen in several ways. Alberta farm assets can be sold in whole or in part, and the buyer can be a new entrant or someone looking to expand their existing operation. Farm operations can also be transferred to other parties via a will or written succession plan.
In 2016, 8.4% of Alberta farms nationally reported having a written succession plan. 4.9% had a written succession plan among sole proprietorships compared with 16.3% of family and non-family corporations.
Just over half (51.7%) of all Canadian farms were sole proprietorships in 2016. Partnerships accounted for 22.9% of farms, while 22.5% were family corporations and 2.7% were non-family corporations. The incorporation rate among farm operations rose from 19.8% in 2011 to 25.1% in 2016.
As such, succession planning is becoming essential.
If you haven’t already done so, it may be time for you to start thinking about succession planning. We believe farm estate planning is an essential part of your Alberta farming operation. You’ve dedicated your life to the success of your farm, so it just makes sense to make proper plans for the orderly transfer of your farm assets.
Farm estate planning objectives include:
Bilyk Financials farm succession & estate planning services are designed to help farm families gain clarity, certainty, and peace of mind. Our passion for agriculture means we’re wholeheartedly dedicated to seeing the future success of current and next farm family generations.
When it comes to protecting your estate, here are four things to consider:
All Alberta farming assets, including land, equipment, and livestock, are left to farming heirs. In contrast, assets outside the farm business, including insurance, retirement accounts, off-farm savings, and rental/vacation properties, go to off-farm heirs. The value of the farm assets might be more significant than non-farm assets, but it gives farming heirs complete control of the land and operations to pursue their livelihoods and maintain the farm.
Succession planning requires working through—and planning for—multiple scenarios, including unexpected death. A solid plan also minimizes the likelihood that fractured relationships will wreak havoc on the farm. Preservation of your assets begins by protecting them. Insurance policies protect you from certain risks and are critical to preserving your wealth. To see if your coverage is sufficient and appropriate, we regularly review insurance coverages to help ensure our client’s net worth is protected, including life, health, disability, property, and casualty. We realize life evolves, and your needs change; our team will proactively suggest adjustments when they do.
Being a Alberta farm owner, you have access to significant potential tax advantages when selling certain farm assets. Through proper planning, with the help of professional legal and tax advisors, you may be able to minimize your taxes and maintain more family wealth when selling your farm property. We believe managing your tax exposure is one of the most effective methods of making your money work for you. Our team understands and identifies proactive strategies to help minimize current and ongoing income taxation. We consider the tax implications in all facets of the wealth planning and asset allocation process and partner with our client’s tax advisors to help preserve and grow their wealth.
We help identify retirement income needs by walking through retirement expectations. We help farmers identify retirement plans, current income, and savings. That information helps create an in-depth understanding of goals, financial capabilities, and vulnerabilities. We can recommend ways to leverage your money to make it go further for those charitably inclined, allowing you to give more. Whether giving now or in the future, bundled or incrementally, we can help you maximize the value of your gifts while minimizing taxes.
Tax and estate planning involving the family farm requires consultation with professional advisors as the rules are highly technical and complex. In addition, each individual’s situation will be unique in many respects requiring the expertise of a professional to customize the appropriate plan or solution which fits your particular circumstances and personal objectives. When it comes to the people, organizations, and institutions that matter most to you, transferring your wealth takes careful planning and preparation. Our wealth planning team takes time to understand the specific objectives you’re trying to accomplish in determining how your estate will be distributed after you are gone. We work with you to regularly review your core estate planning documents, such as a will, durable power of attorney, or a trust to ensure it reflects your current assets and wishes.