The Rural Voice, 1998-01, Page 30Planning
ahead
Whether planning to buy a
farm, retire, or transfer it to
the next generation, proper
planning can help
accomplish your goals
26 THE RURAL VOICE
is still hard for a farm family to think of itself as
having to deal with high finance, but with the worth of a
typical farm measured in the hundreds of thousands,
even millions, it takes proper financial planning to buy
a farm, to retire, or to turn the farm over to a son to
daughter.
Financial advisors interviewed for this article stressed
that each family's situation and needs are different, but
most agreed it takes a team approach involving an
accountant, a lawyer, a financial advisor and perhaps a
banker, to solve the problems and put a plan in place.
"No one professional group has everything in place,"
says Dean Whalen of Lyons & Mulhern Financial Services
Ltd. in Goderich. Often, he said, he starts the ball rolling
and calls in other professionals because he's the one who is
likely to be out visiting the family on their farm.
"Each and every farm situation is individual and needs a
different approach," David Packham, of MetLife in
Stratford, told a financial planning meeting sponsored last
year by his company and Canadian Imperial Bank of
Commerce. He suggested that a banker is an important
fourth party in the team approach.
Laurence Beane of Y.I.S. Financial Inc. agrees that what
suits one family may not be suitable for the neighbour
down the road.
As well, these advisers agree, the earlier you start, the
better. "The earlier you start the less money you have to
put in," says Brad Cunningham of Diamond Financial in
Atwood. "Ideally your plans should have been set up when
you were young."
While that's usually the word heard around investments
in RRSPs, there are other ways starting early can help too.
A family can help their son or daughter emerge from
college or university debt free, for instance, by starting an
education fund, says Beane. If a family started putting
aside $100 a month in trust, from the time a child was born
and invested it in a moderately successful fund, it would
have grown to $75,000 by the time the child turned 20.
That would pay for his or her education or, if they decided
not to go on to school, would be available for other uses.
The first step to finding a solution to a family's
problem, Whalen says, is geeing people to define exactly
what they want to accomplish. Is the goal to establish
retirement funds? Is there a need to turn over the farm to
one child while protecting the rights of others? "The
important things is to put down in your own words what
you want," he says.
One example, Whalen says, might be a family with four
children, only one of whom is actively working the farm.
The parents want to be fair to this child who stayed and
helped on the farm and turn over the farm to him or her in
such a way that they have the ability to carry on. At the
same time, they want to be fair to the three other children
who deserve their share of the inheritance.
If the family hasn't done careful planning, the child who
wants to continue to farm may be in a box. In order to pay
the shares of the other three siblings, he or she may have to
sell part of the farm operation. That leaves the farm in a
less than viable situation.
One of the creative ways of dealing with the problem
has been through the purchase of life insurance, payable on
the death of the surviving spouse.
T