You’ve poured your life into your farm and now it’s time to change your life’s focus.
You will pass on the farm to a new generation – either a family member, a friend or a maybe even a stranger.
Where do you start? The process may be overwhelming.
Because every situation is unique, no single approach will work for everyone.
You will be planning to transfer knowledge, skills, labour, management and ownership.
One way is to think of this as a process that will occur over time. This process should be broken into multiple steps that can number anywhere from 8 – 20 steps depending on the complexity and details.
Here are 8 steps to walk you through the process of farm succession.
The first step is to have a conversation with your advisor about how you picture the future for yourself, your family and the farm. What exactly would you like to achieve in your life and the lives of your family? How will your life look in five, ten or even twenty years?
The time involved – several hours and perhaps several meetings because you will need to think about these things.
The result: a summary report with a series of suggested steps to consider.
This first conversation is conducted in complete confidence and involves no investment on your part other than your time. (No one will even know you are considering succession – unless you want them to know)
This step involves a detailed discussion of all areas of your personal, family and farm life that can have a financial impact on your wealth with a Wealth Advisor. Our report is called Your Current Farm Reality Audit™.
The time involved – several hours for the interview and a couple of weeks to generate the report.
The result: The Wealth Advisor will then outline in detail your needs, issues, benefits and possible outcomes. The report will address tax issues as well as offer suggestions for restructuring your farm to reduce the tax payable from the sale or transfer of your farm assets. The report will also cover how to deal with all family members in a fair and equitable manner in the event of a farm transfer.
Before you commit to the next step you will understand how the wealth advisor’s expertise can benefit you and your family for years to come.
Like Step 1 this discussion and report is confidential and requires no investment on your part. That’s right – it’s free.
Why would a Wealth Advisor give this advice for free?
When you sell your farm, all your blood, sweat and tears will have been turned into cold, hard cash.
Now comes the challenge of protecting and growing that money and that’s where a reputable Wealth Advisor will shine.
They want to work with you to invest and protect that money in a prudent manner. They want you to invest your money in their managed portfolio solution. We recommend a managed portfolio solution because they generally have a higher return for a given level of risk and are generally more tax efficient.
Commit to working with the wealth advisor to develop your Farm Succession Plan. Ours is called Your Farm Succession Blueprint™.
Develop the Your Farm Succession Blueprint™.
In the same way architect or designer helps you design and build a home or farm building, a wealth advisor will take a prudent approach to designing the plans that will protect and enhance the value of your farm and minimize taxes in preparation for sale or transfer of your farm.
When you commit to working with a wealth advisor, they will work closely with you, your legal and accounting teams to implement the best financial, legal, insurance and tax strategies possible.
They are all committed to working together for your benefit.
Because once you sell/transfer your farm, you will now have millions of dollars to protect, you will need the help of skilled wealth advisors who can grow your money in such a way that you will pay the taxman as little as possible.
The Investment Management Team that the wealth advisor works with will also create a document called the Investment Policy Statement (IPS). Based on Steps 1 and 2, the IPS summarizes your desire to:
- understand and manage your personal level of risk
- plan for ongoing income and liquidity requirements
- understand how your money will grow
- understand how to minimize taxes
- plan for changes in lifestyle in the years to come
- understand how inflation and market volatility will affect your investments
The IPS outlines the strategies the investment management team will employ to build you what we refer to as a Private Client Managed Portfolio. This provides a blueprint for how your investment management team will manage your investments.
Sell/transfer the farm.
Implement Your Farm Succession Blueprint™ outlined in Step 4 above.
Implement the investment strategies outlined in the Investment Policy Statement of Step 5.
Now comes the ongoing monitoring and review of your investments.
The wealth advisor will meet with you regularly to review your portfolio to ensure that it is meeting your needs as per the IPS outlined in Step 5.
They will also discuss issues with you that may have an impact on your wealth, as well as any changes you may have made or want to make in your lifestyle and how this may impact the way you want to receive your investment income.
Adrian Spitters, FCSI, CFP, FMA, is a Senior Wealth Advisor with Assante Capital Management Ltd. He can be reached at firstname.lastname@example.org
Win Wachsmann has been helping businesses improve their marketing and helping them get ready to sell their business. He doubles as an author, journalist, syndicated columnist, filmmaker and businessman who makes his home in the Fraser Valley of British Columbia. His articles and columns can be found in some of the finest offline and online magazines, journals and media properties.
He can be reached at email@example.com.