You’ve worked hard your whole life and lived within your means.
Now, you want your estate to help the future generation succeed — not create problems or heartache for your family.
But if you want your estate to create a legacy of positivity, you’ll have to proactively communicate your wishes through an estate plan.
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Like most people, farmers struggle to talk about estate plans. A recent survey by Investment Planning Counsel indicates that 58 per cent of clients had not talked to their family about their estate.
Communicating about a farm estate plan is even more important because the legacy isn’t just financial. Farm inheritance deals with deep traditions tied to the land and the farm, assets gifted to successors and the tremendous increase over time in farm asset values.
Although there’s no obligation to disclose the contents of your plan during your lifetime, keep in mind that assumptions and worries are born in that knowledge gap (or rather lack of knowledge gap), possibly creating unintended problems for your heirs. It can also help to talk about your estate when everyone is calm and better able to listen to your wishes rather than when they’re dealing with the stress and pain of grief.
Aim for low or no drama. Presenting your estate plan is not about getting attention with a big reveal, setting off squabbles or fuelling entitlement. This is an opportunity to create accountability around your wishes, teach the next generation about the importance of financial planning and make sure your family knows how much they mean to you.
People often anticipate that sharing their estate plans will lead to conflicts, so they avoid these discussions altogether. If you believe that discussing your plan could cause more harm than good, ask yourself why you feel that way and think of other ways you can help your family learn to communicate about money and build stronger trusting relationships. Sometimes it helps to have a trusted third party guide you through these tough conversations.
Follow these tips to have better conversations about your farm estate plans:
- Carefully choose what you want to share. Before starting a difficult conversation, it can help to gather your thoughts and jot down a few notes beforehand. In my consulting career I’ve noticed that sharing estimates instead of specifics is better because financials are always changing when you are alive. For example, you might say, “The plan is for the home farm to be sold, and the proceeds split equally between each of the grandchildren and potentially great-grandchildren.”
On the other hand, details matter when you’re talking about who your executor will be, who will have power of attorney and who is responsible to execute the wishes of your living will. (A living will outlines your instructions and preferences for health care if you’re unable to express them yourself.) - Let them know you are prepared. Create a secure document that contains all the important information your executor and/or holder of power of attorney will need to carry out your wishes in the event of incapacitation or death and let them know where you keep it. Information could include:
- Where you keep your will, power of attorney and living will. Is there a secondary will for the farm?
- Name and contact information of your executor, lawyer, financial planner and accountant.
- Farm asset list, which includes parcels of land listed by legal description, common name, whether there is any outstanding debt and whose name they are in. Where do you keep deeds, rental agreements and mortgage agreements?
- A list of off-farm investments, personal insurance and accounts. Include contact information for financial advisors, life insurance broker and banker.
- Funeral plans, such as cemetery plots and any special wishes.
You’ll also want to make sure that all the important players (executor, holder of power of attorney, etc.) know each other and their respective roles. Introduce your executor to your financial planner, lawyer and accountant. This can help each of them better navigate the situation when the time comes. Executors are often paid, so let your family know ahead of time if that’s what you intend to do.
Choose an executor who can communicate regularly with beneficiaries. Your executor does not have to be related but does have to be organized, patient and understand your wishes.
(For a free template that can help you organize the above, visit farmersbridge.ca and download the Because I Love You list.)
- Start with the living plan. Share how your financial plan has been set up to take care of you (and your spouse) as you age and how you plan to cover additional costs, such as extra health care, funeral expenses and taxes. Nobody wants to be a burden, but the reality is that many of us will require extra help as we age. This responsibility should not be silently assumed or automatically delegated to the farm successor or the females in the family.
Having these conversations when you’re still healthy minimizes worry or conflict. It also creates a safe time for the family to discuss alternative care solutions and for you to indicate your preferences now rather than have random people reactively decide for you later. - Be inclusive and allow room for questions. Set aside specific times to discuss important issues. Whatever you do, do not have it during family get-togethers such as Thanksgiving dinner! One family I know meets once a year to share information — from wills to health care plans to who is hosting family holidays — and then go out for a fun dinner together afterwards.
Adding a formal structure to family meetings can keep discussions focused, smooth and productive. Try to keep them to under an hour and don’t feel that you need to tackle everything at once. You can always book another meeting if it takes the pressure off.
Remember that you’re teaching your family how they can share information and make decisions together when big issues, such as health problems and death, inevitably occur.
And family meetings don’t require everyone to be physically in the room; virtual meetings can work as well. For example, during COVID my mom, who was having health issues, was lonely. My siblings started hosting Dorothy Zoom calls every Sunday at 6 p.m. A few months later, when she was undergoing cancer surgery, these calls became so important to share information about her health care, and, later, palliative care and her final wishes. - Introduce your family to trusted professional advisors. To smooth the execution of your plan, let your family meet advisors involved in your estate planning. It can be as simple as inviting your financial planner to your family meeting to explain issues related to your plan. Or invite your insurance agent to explain how life insurance is part of your succession plan or have your farm accountant explain the farm rollover rule and how your estate tax planning has taken advantage of that legislation.
This can be another great opportunity to teach the next generation about money and tax planning! Although the next generation will likely find their own trusted advisors, you are empowering them with additional supportive people and resources. - Explain your estate objectives. Hearing the words from your own mouth about what you want to accomplish with your estate gives your benefactors and executor clarity and purpose. Guessing at what someone wants when they are dead is fraught with misguided intentions, even if they are good intentions. This grey area is often where conflicts arise within families. If you are clear up front, you release them from an unwinnable guessing exercise and avoid negative feelings of self-worth or wrongdoing.
