Nerissa McNaughton
Derryn Shrosbree knows the pain of a farm without a plan. The longtime farmer, father and founder of 33seven lived through what he calls a “circus” when his father passed away without a continuity plan. The aftermath tore his family apart and saddled the estate with crippling tax debt. The cause? His father’s refusal to gather the right people to have the necessary conversations.
This story is difficult but common in Canadian agriculture. According to Farm Credit Canada (FCC), a staggering $50 billion in farm assets are expected to change hands in the next 10 years. Yet, roughly 88 per cent of Canadian farmers still lack a continuity plan. This gap between the value at stake and the level of preparation is a recipe for disaster, both for the farm’s legacy and the family’s well-being.
“Without a plan, you’re just farming for the government, not for your family and not as a legacy,” says Shrosbree. This is because without clear, legally binding instructions, the government’s rules will decide who gets what, often with devastating consequences that involve the dissolution of happy family units.
While continuity planning is the best course of action, there is a path that Shrosbree calls “low-hanging fruit.” It’s an easy, affordable, fast way to quell family disputes and clearly show, according to the farm owner’s wishes, who gets what.
That path? Write a will.
Currently, less than 30 per cent of Canadian farmers have a will despite it being an easy task. Why? It’s too easy to push to the bottom of the to-do list. The topic feels heavy, and many don’t know where to start. Like all things in life, however, avoiding it doesn’t make the problem go away; it just hands it to your grieving family.
“At the absolute minimum, every farmer needs a will,” says Shrosbree, and he recommends having two: a personal will for your personal assets and a corporate will to deal with the farm corporation’s shares. “A will is your instruction manual for what happens after you’re gone. It removes ambiguity and ensures your wishes, not a provincial formula, are followed.”
What exactly is a will? In Canada, a will is a legal document in which you declare your wishes for the distribution of your property and the care of any children after your death. It allows you to name an executor to manage your estate. Without one, you are considered to have died “intestate,” and provincial law dictates how your assets are divided.
The old saying “good fences make good neighbours” applies just as much to family dynamics. Even if your children get along perfectly today, their lives, spouses and financial realities will evolve. A will acts as the ultimate good fence, clearly defining boundaries and expectations to prevent future disputes.
“Why allow your farm and your family to get torn apart because of a lack of communication?” Shrosbree asks.
The process doesn’t have to be intimidating. A will scribbled on a napkin, or as Shrosbree says wryly, “You can write in marker on toilet paper,” can be legally binding. But, to be fair, while hastily scrambled wills can and do hold up in court in some cases, that is a risky approach that invites legal challenges. A properly drafted will is your best defence against undue influence from one party or another, and ensures your intentions are clear. These days, a quick call to a professional and even a recorded message or filled-out form can be the basis of a good will, making the choice to call a professional the easiest, and best, course of action.
Death isn’t the only event that can throw a farm into chaos. What happens if an accident leaves you unable to make decisions for yourself?
“A power of attorney (POA) is key in case the combine doesn’t kill you but incapacitates you,” Shrosbree cautions. “The POA is the person who makes decisions for you if you can’t.”
A power of attorney grants a person the authority to manage your financial and property affairs on your behalf. This power can be effective immediately or upon your incapacitation. A separate document, often called a personal care directive or health-care proxy, is typically used for health-care decisions.
Choosing your POA requires careful thought. This person will have significant control over your assets. While a family member is a common choice, Shrosbree warns of potential conflicts of interest.
“If the POA has a material interest, they can steer things to themselves,” he says. “You need to appoint someone you trust completely to act in your best interest, whether that’s a family member, a trusted friend or a professional like a trust company.”
The final piece is the executor.
An executor is the person or entity appointed in a will to administer the estate of the deceased. Their duties include gathering assets, paying bills and taxes, and distributing the remaining property to the beneficiaries as specified in the will.
The executor’s job is demanding. They must be organized, responsible and capable of navigating complex financial and legal tasks during an emotional time. Like your POA, your executor must be someone you trust to be impartial and diligent. It can be a significant burden, so it’s essential to discuss the role with your chosen person beforehand to ensure they are willing and able to accept the responsibility, or to delegate this task to a professional entity.
Getting started is often the biggest hurdle; the entire process of writing a will and choosing a POA and executor is simpler than most people imagine.
“You could do 80 per cent of your will in 30 minutes while in the cab,” Shrosbree says. “The key is to start the conversation. A 20-minute call with a competent professional can set the entire process in motion. Modern tools have made estate planning more accessible than ever, with virtual meetings and simple questionnaires that help you organize your thoughts and assets. The cost of professional advice is a small fraction of the potential taxes, legal fees and family strife that can result from having no plan at all.”
Once your documents are drafted, make sure they are properly signed, witnessed and stored. It’s useless if no one can find it if the farm owner develops dementia, is in a coma or didn’t tell anyone where the will is stored or which professional to contact.
Shrosbree advises, “Every professional service advisor on your team should have a copy in their files. Anyone with money attached to you should have a copy. Your lawyer, accountant and financial advisor should all have copies.”
Finally, a continuity plan is not a “set it and forget it” document. Your farm, family and financial situation will change. Review your will and POA every few years or after any major life event – a farm expansion, a new grandchild or a change in assets – to ensure they still reflect your wishes.
Putting your wishes in writing might feel uncomfortable now, but it is one of the most powerful acts of stewardship you can undertake. It protects your family, preserves your legacy and ensures the farm you’ve worked so hard to build continues to thrive for generations to come.
Learn more about continuity planning at www.33seven.ca.
