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With the help of advisors, he and his parents agreed to jointly run their dairy operation for a period of five years, after which time Ted and his wife Christine would assume full control. Things are a little different now.
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With skyrocketing land values in many parts of Canada, fewer children eager to take over the farm and a slew of other factors, passing on the torch today can be complicated. But getting good succession planning right is vital to a happy retirement, happy children and the future of your farm.
Of the hundred and one items on your to-do list, planning for retirement may rank pretty low. Terry Betker, President and CEO of the Manitoba-based farm business management firm Backswath Management, recommends sitting down with your accountant or business advisors five years before you plan to hang up your hat.
Of course, much depends on whether your children want to follow in your footsteps. For ages, neither of the McQuail children expressed any interest.
Then, two years ago, one of them decided she was ready to return to the farming life. Formalize the process, suggests Betker. Pull together relevant financial and legal information so that everyone has a clear picture. Take notes and set dates for the next meeting to keep things moving forward.
Transparency and honesty are also key. You want to create a safe space so your children can openly discuss their goals and thoughts about the operation.
Be prepared for some strong opinions and emotionally charged discussions. Think fair, not equal A big issue many families face arises when only some of the children want to take over the farm.
Parents want to be fair and often assume the only way to do that is to ensure that each child gets an equal share. As a result, they sell the farm and divvy the cash evenly between the kids. Agreements come in all shapes and sizes, says Betker.
A retiring couple may give the farm to the oldest and take out life insurance policies of equivalent value for the other children.
Others stipulate that if a non-farming family member wants to sell their share of the land, they must do so to the successor at a discounted rate.
And of course, there are the substantial financial challenges. Hand over the reins Of course, asset ownership is only one half of the equation.
The other is management. Your son or daughter might be a whiz at fixing a tractor or willing to work through the night to get the harvest in.
But how comfortable are they negotiating the price of cattle or operating the accounting software? Before you head off on that world cruise, make sure the next generation has the skills they need to get the job done.
That may involve insisting successors bone up on their business skills at school, exposing them to all aspects of the farm from an early age or staying on in a management role while they get their feet under them. According to Betker, one of the biggest challenges parents face is coming to grips with the idea of retirement.
Think about your goals More often than not, succession planning is about transitions, not handovers. Spell out your hopes and expectations for the business going forward.
Do you want to continue living on the farm once your successor takes over? Is it essential that the farm stays organic? That means making sure you have enough money for you to live comfortably — on the farm or off — and cover the costs of potential illness or long-term care.
Online retirement calculators are a great place to start, allowing you to input your age, living costs, assets and other details to get some rough projections.
Building up a nest egg of cash investments outside the farm is a good strategy.
In that case, incorporating the farm is one approach to consider. This allows you to retain wealth in the business and offers a number of tax benefits.The Farm features an innovative menu that focuses on regionally sourced ingredients. Located in the heart of Canyons Village, The Farm was named one of “Utah’s 25 Best Restaurants” in Apple Ridge Farm is a small diversified sustainable family farm.
We specialize in Certified Naturally Grown pasture raised chicken and eggs. Our egg layers are given unlimited access to green pasture 24/7 during the growing season and have access to supplemental feed which is grown naturally (no synthetic pesticides, herbicides, or fertilizers) and contains no GMO's.
Intensive animal farming or industrial livestock production, also known as factory farming, is a production approach towards farm animals in order to maximize production output, while minimizing production costs.
Intensive farming refers to animal husbandry, the keeping of livestock such as cattle, poultry, and fish at higher stocking densities than is usually the case with other forms of.
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Succession success You’ve spent a lifetime building up your farming business, and now you’re ready to hand over the reins.
Here’s how to finance a comfortable future — without selling the land to developers or fuelling epic feuds amongst your children. It might be jumping the gun a bit to wish you a happy new year, with a couple more calendar months still left in and all.
But that’s the way it goes in horticulture – by the time the spring is over, and you have time to catch your breath, you’re already planning for the next season.