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HomeMy WebLinkAboutThe Huron Expositor, 1997-02-05, Page 3STOCK Agriculture Daly offers personal advice to farmers BY7lDAWp$C81T Expositor:Editor Farm parents should get ereditrfl'or passing on talf:a million dollars worth- of :assets. Farm transfers and related matters were the topics of keynote speaker Koss Daly's presentation at the Financial Planning for Fart Families seminar hosted by MetLife and CIBC at the. Brussels Community Centre last Monday..Daly is well known as the producer of. Agriculture News and host of. This Business of Fanning on CFPL-TV. He started off his speech with an alternative to trans- ferring your farm to the next generation. "Your farm is yours. You don't have to give it to any- body. You can sell it and go to Hawaii. That's where those people who aren't here today are." joked Daly. On a more serious note, he said "we have to talk in this roost about leaving .this earth." Much of his presenta- non involved anecdotes from his personal -life. -'The tact that you're here mevis you're concerned about it testate planning and farm transfer). Statistics say that only one in three of you wilt actually- do something." Preparations Important He mentioned as an exam- ple. a real life situation he knows of where no prepara- tions are being made for the passing on of land. Daly told of a couple. .approximately 83 and 85 - years -old who own a fruit and vegetable lar'. The hus- Planning BYDAVID SCOTT • Expositor -Editor In the spirit of late night talk show hast David Letterman, here are the top five reasons for NOT prepar- ing an estate plan: _ 5) Your family always gets along 4) You LIKE paying taxes. 3) .The government will look after things. 2t You:re not old enough yet. 1) You won't die. This bit of levity.kicked off a financial planning seminar for farm families sponsored by MetLife and CIBC at the 'Brussels Community Centre last Monday. Accountants. lawyers. bankers and insurance agents offered their advice on how to best handle inter -genera- tional farm transfers and how to avoid paying large sums of taxes and high legal fees. Nine Steps of Plan Peter Benson. a chartered accountant in the London firm of Johnston, Benson, Inkster & Brighton, outlined nine steps of putting together an estate plan. 1) Communicate. You must talk about your ideas with .your spouse and those likely to inherit your farming opera- • tion. 2) Establish Goals. Who will get farm? What arc your retirement goals? • -3) Take stock of the current .situation. 4) Assess plans partially in plaice already. You may have a will you have to update. 5) Review your future financial needs to meet estab- lished goals. 6) Determine roadblocks to achieving, your goals. How will off -farm children be fair- ly dealt with? "Equally" usu- ally means dollars. If there's three children,. dividing • the farm in three pieces, and ae11- ing off two ,pieces would divide it equally but maybe it's not what your. plans arc. 7) Plan financial and invest- ment strategies to achieve your goals. 8) Take action, and prepare AM documents needed. "it's common to come across all of the land, house, property under the husband's namc, PHOTO 8Y DAVID sCOTr GUEST.SPliAlUIR --Ross Daly, host -of This Business of Fanning,, was the keynote speaker Last Monday in Brussels. band stopped farming when he was 70 and teased the farm to his neighbour. The couple has a house but uses only three of the rooms. "Thr husband is starting to drift from reality. He wont let his brother in the house. They have no children on the farm. One son is an executive in the big city. The couple has no will, no preparation. They refuse to discuss the sit- uation." says Daly. "When one. of them dies. the- son will have to come home,. no matter how busy he is. When my father died it took four days to get his finances in order and t have my MBA. He had receipts in old shoe boxes. everything was hidden around the house. That's the kind of trouble you can get into if you don't plan.. That's the reason to go to professionals. if you're not interested in family squab- bles, says Daly. - Daly told of another farm- ing scenario. Several years ago he received a call from a mother in Middlesex County who gave her son the family farm five years previous. She said it now looks Iikc he's going to run it into the ground. "We want hair to sell it so. he and we can have some- thing. He lives next door to a farmer in his 50's. The son wants his respect and he won't quit." Daly recalled the mother saying. - "Losing a farm they. say Is like grieving for a tamil♦ member. The grievin' process takes two years Think of the stress of a firth generation nt a century' tanner. - _ Changes Coining • How well do you ,know -your children, asks -the farm- ing broadcaster. "There's going to be lots of changes in 10 years. They're saying you'll need a combine monitor. They're saying -if you don't want to -keep records tot crops and.genetic histories of plants and ani- mals) you can't -do anything Can your son (ar daughter) do this?". Not only does Daly ask this for the farming- children's success but -for the retired couple -who will also be rely- ing on the •sarin for their retirement Income. Internet important Daly encourages farmers to get hooked up to the Internet if they aren't already. "fin appalled at how few are on the . Internet. HOMEtown t computer net- work) died. In five counties there were only 000 sub- scribers The ) couldn't.get anymore." Daly warned of the' danger of elder abuse and talked about a recent Elgin County study that showed. about tour per cent of seniors are abused iinancial's and physically by their childreti • Dividing Up Estates He suggested parents start making lists of different pus- sessioik their children might like to avoid problems of dividing the estate when the parents die. (For example. one child might like a certain piece of furniture. etc.) "There .i:s no goodwill among your children after CONTINUED on page 9 essential for farm transfers You can run into costly pro- bate • fees if the husband :dies to have everything -put into the spouse's . name . There's a tax advantage to having your spouse as panner. Looking at your -wilt is a starting point. .But you don't Just write a will for estate planning." 9) Engage qualified advis- ers to assist in your planning and implementation of that plan. Benson also reminds people to take advantage of the $500,000 capital gains exemption which allows for tax-free transfers to spouses and children. (It this was taxed. for $500,000 you would play $175,000 in taxes). He -also notes this exemption is per, person. NOT per farm. So between them, a couple has $1 million of capital gains exemption they can use. Other techniques available in farm estate planning are: • spousal rollovers • family trusts • family partnerships • incorporated companies. The advantage of incorpo- rating your farm. says Benson; is that you "don't have to figure out who gets what building and tractor. easy to document.shares." Why. have a Will? "If you.don't, your estate will be distributed in accor= dance to provincial law. You can decide who receives your estate," said lawyer Joan Krantz-Sippel of the London law firm Scott,,Krantz-Sippel &Brander. Other reasons, for a• will are so you can name who will take care of your children under 18 and,theirfinanccs if you die. Having a..will also prevents your property:from being tied up and fro;en while a court:decides;.who should administer your cstatee sai d: KrantseSippe l . "You won't be able to divide up:the estate. until at least a year.after-thc.death of your spouse,",she said. It saves _ a significant amount of money on legal expenses and possible accounting and appraisal fees if a will is already prepared. "If children under the age of majority arc involved, -the "children's lawyer" - a gov- ernment department - ovcr- raecsthe investment of ,the • children's assets and it's extra estate can he eaten up in . "•. '' Vr es, lee.s,.tuneral expenses. -legal mon ,. -:; •AR• .. Living'Wtt14'lirc im to have .in case you. or your spouse became incapable of making decisions. Wills should also he reviewed regular's. - especial- ly if you are separated or your spouse dies. if you change your business and it you have children. • Partnership Agreement Why you should have a partnership or a shareholders agreement:• • Commonly referred to as "buy -sell" agreement, • Whenever two or more people arc working together. their rights and obligations should be clearly defined in a wr►u..., agreement. • Provides for what happens it one person dies. wants to sell or retire, or becomes dis- abled. • Sets out operational details. Family Law Act • The government has stat- ed marriage is a true ecxmom- se partnership. • Act applies when mar- riage ends. ic. Death of one spouse, separation or divorce. • General rule that both spouses get equal share of all property. • There arc a number of exceptions to thc general Me. "If the farm was owned by the husband when thc couple wed, they would only split the profit the farm made from since their .marriage if they, separatcd.,Gifts and inheritances received -do not have to be shared." The London.lawyer also said it was a good idea to .appoint someone, or more than one person, to have power of attorney for your ,personal care, if for instance. you have to go into a nursing ,home or your health declines and someone has to decide whether to leave you on a respirator or not. Four Cornerstones Dave Packham of MetLife said the four cornerstones of personal financing arc your lawyer, banker, accountant and estate financial planner. Estate planning should involve all four, not just one, be said. Dying can be costly. Peckham said anywhere Iron) 15 to 60 percent of your upoolessiedeath. A difficult -task facing retir- ing Carmen is the fair and equitable treatment of ( - larni children. . "What assets can the fernier sell without affecting the operation - Quota', Machinery'' Land'' • Livestock''" The odds are also against the longevity of family oper- ' ations. Quoting a Financial . Post on the topic, Peckham • said. "only 30 per cent of family businesses survive through two generations and just 10 per cent make it through three. One of the ways_to transfer a farm at today's prices with- out a farmer's child saving every penny they'reever ntadc is to finance the trans- fer through insurance, said the MetLife broker. CONTINUED on page 15 TME R//00w EXPOSITOR, Perbrurry Is, 107-3 secorth Jeweller* „Gilt 4.4V/' Mair( St. Seatorth 527-0270 CLEARANCE New Product Lines are arriving so we are making room PULSAR & LORUS WATCHES LARGE SELECTION OF LADIES' & GENTS' RINGS, COSTUME JEWELLERY & GIFTWARE PRICE PAY NO TAX DN 111K OLD CHAINS, PENDANTS, .NRACELETS, EARRINGS At CHAS USBORNE & HIBBERT MUTUAL FIRE -INSURANCE COMPANY ANNUAL MEETING The annual meeting of the policyholders of the Usborne & Hibbert Mutual Fire Insurance Company will be held - in the Kirkton-Woodham Community Centre at 2:00 p.m. on Monday, February 24, 1997 to receive and dispose of the Financial and Auditor s Reports: to elect Directors • and to transact any busuness that may -rightly come before the meeting. • - Nominations will be received for the election of two Directors for a three year term. The Directors whose term of office expires are Jack Hodgert and Larry Gardiner, both of whom are eligible for re-election. Nominations will be received for the election of a Director for a two year term, necessary because of the death of Mr. Lorne Feeney. Larry Gardiner President - E.J. Caers Secretary -Manager Send Your Vs:'ine a message $o PUBLISH YOUR VALENTINE SENTIMENTS IN THE HURON EXPOSITOR'S VALENTINE HEART WARMERS COLUMN Here are samples of whpt .you, might sQ.y4 Tell your Valentine haw much .you care. Your speclol rnessoge will e,published Wed., Feb. 12...for Qnly $5,00 plus GST'tor255words or=less .10 each caddttli?nal word. Prepaid. If your is f-ornprptio.. , it's easy Just stop In lhe4posItar!s9friae-at 100 Main S Seaforth, before Noon,Mon oy,'l eb. 10 and your special message. 01be published Valentine's Dsxy. For tnore information please call 527-0240. the Huron Expositor "Your Community Newspaper" Anne, 1 love you more each and everyday we are together (Ave Lee To my Ernie. fifteen wonderful years together end your still a ball Love Berl To Chris, Roses -are red. Valets are blue What would at woue be, ll i didn't have u