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Nurturing the

Relationships on • Annessa Good
• FCC Ag Transition Specialist
the Farm Southern AB and BC
Who am I and how did I get here?
Branches- Not going
- Change with the season
- Family dynamics
- Estate Planning
- Markets
- Weather
- Tax & Business
- Prevent generational
- Smaller branches –
break off:
- So important
• Transitioning
Family – rings around the tree • Training the
Take Away:
- Grow with time successor(s)
- core Needs WATERING!
• Dealing with non-
farming siblings or
Rural Roots children
- Legacy • Conflict management
- Culture
Business & FAMILY
- Working with family members Personal
withdrawals are
always questioned
by both

Questions are often

taken as challenges.

Timelines are seldom Someday this will all be yours.

discussed and articulated.
*This is not a PLAN!!*
Take Away:
So… what do we do about these conflicting

Operational Clarity and proper Business Structures

can help alleviate some of the day-day struggles of
working together… each and every day!
The Family Farm - A Real Puzzle

1) Succession Planning
2) Estate Planning
Operating Assets
- Cattle
- Equipment
- Inventory Personal Wealth
- Operating debt Succession is the transfer of a business,

- Salary while Estate Planning is the transfer of assets.

- Dividends +/- - Rent
+/- - Management - Inflation/deflation
- Return onhowever,
equity is combination of both and is pro-active rather than reactive.
- Capital replacement

Off-farm Assets

- Insurance
+/- - RRSP
- Investments
- Return on assets
Unspoken Expectations
are the
Silent Killers
of Family Farms
Farming is an Equity Game
An Income Game

Operational Clarity!
Step 1: Commitment

Business Rule: You get compensated for what Value

you bring to the business.

VALUE = CASH + Cash Equivalents *(1.3)+ Equity

Remember: Farming is an EQUITY game not a cash game!

• Value that each farm child brings • Fixed value

to the company during their first 3 preferred shares.
- 5 years.
• Tax Free
• Formal opportunity to become an
owner/ manager of this • Signing Bonus “Equity Bible”
Take Away: There’s potential for an upcoming ag “storm.”

The next few cycles in ag may not be as good as the last

ten years?

*Equity is even more important in discussions when there

is less cash flow
Equity….Talk the talk – walk the walk
Step 2: Business Meetings

Clarity Fosters Responsibility

Responsibility fosters Management which transforms into

LEAD an area you ASK for advice

MANAGE an area you RECEIVE advice
Communication Critical but BOUNDARIES need to be

Write it down • What went Right? • Educational Reference

• What went Wrong? Points

Step 3: Expectations

A) Schedule - “rules of the farm”

• Big Tasks for the Year: Ex) Calving - schedule on fridge
• This will be tracked & referenced - expectations
• Calendar?

B) Land Lord Assurance

• Inter-generational Relationships

C) Severance
• Equity transferred = equity earned.
• Exit the operation  an agreement needs to exist where the payout is
• For example, 50% down and 50% for 5 years at 0% interest.
Am I simply working on a PROMISE?

Or do I have a clear path to ownership?

Operational clarity must be your mantra!

Transferring land while alive
Why Wait Until The Will Is Read?
Why the Anxiety & Intense Need for Control?!

1. Divorce: Matrimonial property issues (First Generation too??)

2. Disposition: Kids sell and keep the “cash”

3. Debt: If sold below FMV, they add more debt

4. Death: Child dies first, now what?

5. Dementia: What happens when “you” are not “you?”

Life Estate / Remainder Interest
Effectively creates a “co-ownership” of the property

Life Estate holder:

Has the right to use, enjoyment of property &
income for life

Remainderman Interest holder:

Titles merge upon death of Life Estate holder
Title belongs to remainderman and forms part of
his/ her estate upon their death
Repurchase Options:
New idea…
Remember a sale burns up the
capital gains exemption. Do not
use unless receiving REAL MONEY!

Separate Agreement: Repurchase if

ever sold or a legal action like a divorce How about a
ensues. repurchase option at
•Child keeps the equity on the repayment of the the same price as sold?
loan and land value increases

This is a complex idea- Recommendation:

ensure you check with set time period
your Professional only!
Advisors regarding Tax
Transformational Wealth

Individuals require income

Businesses require wealth

Take Away: Your non-farming children will see their
farming sibling willing to help them now just as their
farming sibling has received help from you, as
their farming partners.

Your non-farming children see that the “family” is

not just expanding the farm.

Family Business
The Family Farm - A Real Puzzle

1) Succession Planning
2) Estate Planning
Operating Assets
- Cattle
- Equipment
- Inventory Personal Wealth
- Operating debt

- Salary
- Dividends +/- - Rent
+/- - Management - Inflation/deflation
- Return on equity
- Capital replacement

Off-farm Assets

- Insurance
+/- - RRSP
- Investments
- Return on assets
Estate Planning
Acceptance takes understanding
• Will planning
• Land-based options
Land Allocation Strategies

1) Transfer land to non-farm children 

Consider ‘Lease”
Land Allocation Strategies- LEASE
The Will states that prior to transferring the land to a non-farming
child, the Executor is to enter into a lease with the farming child:

 Specific number of years

 Caveat filed against title to protect farming child from sale of land

 Consider 25% to 30% Crop Insurance Coverage

Provides farming child with:

 A time frame for planning to replace the land if non-farming child
decides to sell
Land Allocation Strategies

2) Transfer land to Business

Land Allocation Strategies - Mortgage
Create a control mortgage and place this into a testamentary trust to stop a quick flip of the
land by farm child.

• If giving the vast majority of farmland AND/OR corporate shares to a child, consider
placing a mortgage or shareholder’s loan into a discretionary family trust?

• The beneficiaries are all of your children.

• If the farm child sells the land/corporate (land)/shares that he/she inherits within 10 years,
and does not replace with farm assets, the loan is called in and cash is distributed to the
off-farm siblings.

• If not, the farm child receives the mortgage and debt is cancelled.

OBJECTIVE: Stop the “quick flip”

Take Away: Always utilize your professional advisors!
Annessa Good
Farm Credit Canada
Cell: 403-462-4119