The Rural Voice, 2002-01, Page 25he could come in to the farm
workshop everyday if he wished, but
at the same time wasn't tied down to
being expect to be there.
Asmooth transfer of a family
operation should strengthen
it, Uren says. He recalls his
father comparing a family to a
sailboat. The younger generation
with its energy is the sail, providing
the thrust to move forward. The older
generation is the keel, providing the
needed stability with its experience
and wisdom.
The older generation tends to run
out of steam after a certain age, he
says. If you're older you start
thinking about whether it makes
sense to tile drain that extra 50 acres,
build that broiler barn or buy more
quota. The younger generation is
looking farther ahead and they
provide the drive to keep the farm
dynamic. There's an advantage to
both generations: one winding down
and one winding up, he says.
This is much to be preferred to the
farmer who works hard right up to
the day he sells the farm for a goodly
amount and buys a house in town,
then sits on a bench in front of the
local shops. A farm is as much a
lifestyle as a life's work, he says, and
farmers need decompression time
when they stop farming. Often that
farmer sitting on the bench isn't there
very long because he hasn't
developed a new lifestyle and his
health goes downhill quickly.
"It isn't firancial freedom but
quality of life that matters," Uren
says.
Once the goals are set, the work
becomes finding the ways to make
the transfer work, he says. If the farm
is viable, there are ways of
transferring that will keep it viable. If
the farm isn't viable, there's not
much that can be done to make it so
through the transfer process.
He likes to find ways to make the
transfer work without borrowing
money. "It's always seemed strange
to me when a couple would borrow
money to buy a farm, work for 25
years to pay off the bank, have a few
debt free years then have their
children have to buy the same
business back from the same bank."
There are ways of self-financing
family transfers to keep as much of
the money at home as possible, he
says.
In doing so, it's important to
protect the senior generation because
they can't afford to have the financial
rug pulled out from under them and
have to start over if the younger
generation fails.
At the same time it's important to
protect the younger generation who
chose to come back and take over the
farm, he says. These are oftenpeople
who had other options. They could
have been successful in other careers
but they chose to come back to the
family farm and they deserve
protection.
FCC's website points out the need
to estimate future farm cash flow to
ensure it will fund the parents'
"cashing out" as well as the farming
child's continuing needs. Sometimes,
these objectives can be achieved only
through farm downsizing. If so, all
the consequences of downsizing have
to be worked out as well.
There's a need to address income
tax concerns, FCC says. The Income
Tax Act contains provisions that
make it easier for you to transfer your
farm business to children. The Act,
however, is written in very
complicated language and changes
almost every year. If you
inadvertently fail to meet eligibility
requirements for these tax benefits,
you may face huge financial
penalties.
Financial analysis sometimes
reveals unwelcome news: there just
isn't enough cash Clow to meet all
family objectives. If parents make
concessions at this point, they should
be sure they give only their "wants"
and not their "needs".
parents may be concerned about
the future success of a farming
child's marriage. It's
something many don't like to talk
about, however, it doesn't make sense
to deny the possibility of divorce,
especially when substantial family
assets are involved, says FCC's site.
Marriage failure after a child has
acquired a significant interest in the
farm can lead to unwanted
redistribution of assets. A divorced
daughter or son-in-law, for example,
could end up owning a bigger portion
of the farm than the non -farming
children. Since this is a situation
where prevention is better than cure,
a contingency plan to deal with this
situation should be part of your
succession plan.0
INTERGENERATIONAL FARM TRANSFERS
One of the most
important parts of
tomorrow is planning
the future today.
Only 4% of Canadian farm families have a
written succession plan. Be part of the informed minority.
Start planning your succession strategy today and keep your
family name on the mailbox.
John H. Uren & Associates inc.
John Uren
1-800-766-9951
Nancy Ackert
1-866-396-8108
JANUARY 2002 21