Your client’s family farming business has been carried on for generations. But what happens when the current generation of farmers is starting to consider retirement? There are some tax efficient strategies to pass the farm on to the next generation but a key question for your client to ask early on is: “Does the next generation intend to work on the farm?” What if only some family members want to remain involved in the farm? How do they plan to transfer their estate to accommodate those active in the farm and those who are not? Is equal always fair? The latter is often an important question in farming situations, especially when a family farming business is asset rich and cash poor. Can estate equalization be achieved without jeopardizing the farming operation?
Farmers, like all business owners, need to have a succession plan that achieves their estate planning and retirement goals. Insurance can play a meaningful role in this plan. It can be used to fund the deferred tax liability that may have been growing significantly over multiple generations, and to equalize their estate if the farm is being passed to some children and not others.
Do you have clients who own farms? Be sure to share the article below to help them understand their tax and estate planning options.
Reach out to your local PPI Collaboration Centre today to discuss the planning alternatives available for farmers.