Secure Your Farm’s Future: Succession Planning, Risk Management & Financial Strategies

The Spring 2019 issue of Intelligent Farmer delivers essential guidance on farm succession, risk mitigation, and financial planning. Here’s a snapshot of key insights to protect and grow your agricultural legacy:

Click here to download the full Spring 2019 issue of Intelligent Farmer today

Farm Succession Planning: 10 Critical Questions

When transitioning ownership to the next generation, ask:

1. Will parents transfer complete ownership?
2. How will management decisions be made?
3. What are the parents’ post-retirement income expectations?
4. Can the farm afford debt taken by parents during the transfer?
5. How will non-farming children be treated?
6. Will ownership be given or sold?
7. What happens if a child wants out?
8. What is the parents’ post-transition involvement?
9. How will control be maintained during the transfer?
10. What income sources will parents rely on after transfer?

Tax-Smart Succession Strategies

• Capital Gains Exemption: Utilize the $1 million exemption on qualified farm property sales.
• Transfer Timing: Plan transfers to minimize taxes—consider deferring income or using a Withholding Certificate for U.S. property sales.
• Family Dynamics: Address communication challenges and founder reluctance to let go.

Six Risk Management Tools for Farmers

1. Crop Insurance & Government Programs: Protect against weather and market volatility.
2. Forward Contracting/Pre-Paying: Lock in prices for inputs and outputs to stabilize profits.
3. Commodity Hedging: Use futures and options to hedge input costs and market prices.
4. Diversification: Grow multiple crops or expand into new sectors to spread risk.
5. Foreign Exchange Strategies: Manage currency risks for imports/exports.
6. Fixed Interest Rates: Lock in rates to avoid rising borrowing costs.

Financial Planning Essentials

• RRSP/TFSA Limits: Maximize contributions to tax-advantaged accounts.
• RESPs & RDSPs: Plan for education and disability savings with government grants.
• Capital Cost Allowance (CCA): Write off up to 45% of new equipment costs in the first year (2019 rules).

Don’t miss the full issue.

Read the Spring 2019 edition of Intelligent Farmer for in-depth strategies on succession, risk management, and financial optimization to safeguard your farm’s future.

RBC Dominion Securities Inc. | Lorkovic DeKoning Wealth Management