Lawyers, accountants, financial advisers, insurance specialists, estate planners and mediators can all help create a plan
It takes a community to raise a child and it takes a team to build an estate plan.
Lawyers, accountants, financial advisers, insurance specialists, estate planners and mediators may all come into the mix to create a farm estate plan. Throw in farming children and non-farming children and mix in a divorce and post-farming income and the plan can get complicated.
Lawyer Tracy Hanson said because of the complexity of some farms and the time it takes to draft and redraft an estate plan, she advises her clients to start with a will.
“Where I start is asking, ‘how old is your will,’ ” said Hanson of Airdrie Alta.
“That becomes your backstop if something happens. It always comes back to your will,” she said.
Hanson, a specialist in agriculture and estate law, said some people tend to put off making a will or creating an estate plan. A will can be relatively simple and is always in place if the estate plan is slow to build.
Tracey Feist of Springbank, west of Calgary, said it took about 15 years of talking, planning and adjusting for her father’s estate plan to settle in place. But when her father, Gary Munro, died last year, the established estate plan took one worry off his daughters.
“It allowed us to grieve and focus on that grief. He did that for us. Because of his level of communication, it afforded us the opportunity to grieve. We had a solid plan with a great foundation to fall back on,” said Feist.
“When dad died, everything went according to the plan. It allowed my sister and I some confidence going forward that we were fulfilling our father’s wishes. It made it easier on the two of us, as a team, to implement those wishes.”
Feist said the initial estate planning discussions began about 15 years ago. Feist and her sister interviewed several estate planners before settling on one.
“They gave us a greater understanding of the importance of building a team. We already had a long-time farm accountant who was really good and had the base knowledge of where our farm had evolved from and to,” she said.
With lawyers, tax specialists and accountants in place, the family developed a plan, knowing it would continue to evolve with time and more information.
“The accountant gave me some advice early on in the planning stage. He said, ‘look Tracey, you are trying to make a plan for what is right for this moment in time. You can’t foresee the future. You make the best decision knowing what you know at that time’.”
Hanson also said building a team takes time, effort and energy.
“The biggest thing for people to remember is that estate planning and succession planning is not an event. It is a process, not an event.”
Getting the right mix of advisers and experts in place costs money but is key because of the complications created by the complexity of farms and ranches.
Those individual experts need to know what is going on with the rest of the group, she said.
A decision to gift land may impact taxes for the parents, or children, or create hard feelings among the family. The option of selling land may create more complications.
“It takes a significant investment in time and money to get the right advisers, but given the value of most operations, it’s time worth taking,” said Hanson.
Feist said it’s also important to understand succession and estate plans are not cookie cutter plans. What fits for one farm may not work for another.
“Planning, doing your best and when things do start to happen, you make decisions at that time that hopefully steer you in the right direction,” said Feist.
When discussions unravel, Hanson said she brings in a mediator to keep the parties talking and working together.
“Inviting a mediator to the table is often valuable when there is conflict or a lack of communication between parents and farming children or non-farming children.”
Financial advisers are also key to help families take a hard look at the finances to see if the farm or ranch can support more than one family.
Hanson is empathetic to farm families going through estate or succession planning. She and her partner took over her family ranch 21 years ago.
“I’ve gone through the process with my parents and siblings and have real life experience and can empathize and understand what my clients are going through.”
Feist said it is not easy creating a plan. For half the time the estate plan was developed, she lived in the United States. Each time she came back to Canada, the family would continue to meet with the experts to push the plan forward.
“Having the difficult conversations with your family members and to start forging those plans that will help you in the future,” said Feist.
“The important thing is to have a plan. The plan is going to evolve over time.”