Don’t Get Stuck in a Rut!

Don’t Get Stuck in a Rut!

rut

Two dictionary definitions of a rut are: 1) A long deep track made by the repeated passage of wheels on vehicles, 2) A habit or pattern of behaviour that has become dull and unproductive but is hard to change.

Over the last few years I have chatted with many older farmers or business owners who seem to be stuck in this proverbial rut.  I understand the pride and sense of purpose in being stewards of the land or of a thriving small business. But, there comes a time when you need to make a change before ill health, disability or worst of all – death – makes the decision for you or your families.

My very astute father-in law had a couple of expressions that struck home with me. The first was “Stop and smell the roses along the way, because you’re going to be a long time fertilizing them once dead.” The second was “Don’t get stuck in a rut, because the only difference between a rut and a grave is that a grave has ends.”

These comments might seem surprising to you all – coming from a 69 year old financial guy living in Stettler, but I’m not stuck in a rut. I love what I do, I have great staff and best of all a smorgasbord of great clients who inspire me to go to work every day. I am working on a succession plan though, for a few years down the road, to ensure my clients will continue to be served once I am ready to retire.

Anyway, back to the topic on hand.  For all of you out there who have reached this stage on life, I’m not advocating that you just quit.  But, if you want your family farm or small business to continue, then you need to develop a process for an orderly transition.  This may be to a younger family member, or maybe selling some of the land and renting the rest out. Or, you may want to sell to a third party to provide income for your retirement.   You need to start into any of any of these processes 3 or more years ahead of the sale or transfer date. Once the farm or business is sold along with any plant, equipment, cattle, inventory, etc. – our hands are tied as to using any of our planning opportunities that require sufficient time to implement.

You never see a Brink’s truck at a funeral.  You can’t take it with you when you’re gone.  On the other hand, you do have some options to control the disposition of your estate.  This can be achieved by way of a trust or with an annuity settlement option.

So please, if the sale or succession of your family farm or small business is on your mind, take the time needed to properly plan the process. Discuss the process and reasons why with your family ahead of time.  Allow sufficient time to implement any of the available planning strategies with your accountant, lawyer, and financial advisor.  Minimize your estate tax hit and maximize any sale proceeds.   Conserve your final estate value against debt or tax shrinkage and ensure that those children not involved in the farm or business will be treated equitably.

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