Estate planning involves the orderly and tax-efficient transfer of personal wealth and assets to your heirs. Though it is similar to succession planning, the two differ in that succession planning involves the orderly transfer of the business and its assets to a successor—family or unrelated—who is prepared to manage the farm.
Given the family-owned nature of most farming businesses, it is easy to see how intertwined these two processes can be. Business structure can also influence how these processes can take place.
Communicating with Family
While the planning tools are relatively straightforward, initial communication and goal-setting can prove to be challenging. In addition to legal and financial advice from their management team, many farm families benefit from using a facilitator to help them through the communication process that is essential in both succession and estate plans.
Estate planning is often a difficult topic to bring into a family discussion. It invokes personal feelings, emotions and differing points of view. Personal complications may arise, such as financial concerns, complex taxation rules, and legal procedures.
Estate planning should be seen as an ongoing process, not a once-time occurrence. Keep these ongoing considerations in mind:
- What type of business arrangement best suits your farm
- When to transfer the farm to your family
- How to set up your will and when to change it
- The process of estate administration
The B.C. Government has co-developed the following succession plan checklist. It pulls together information from farm families, accountants and farm-management specialists. This publication also lists points you must consider in an estate plan.
The following guide deals with some of the issues related to the transfer of your assets to the next generation, as well as the accumulation and management of those assets during your lifetime.