capital gains exemption rules are very specific about what transfers,” she explains. “Youmight be out of luck in terms


of using capital gains exemption because you have toomuch cash or non-farminvestments, but if you do a succession plan in advance, you can move things around, get rid of cash, pay down debts, and transfer investments to the greatest advantage. There are some things you can’t do when the taxpayer has died.”


Putting legal structures in place After the family has established a


strong working relationship and set their goals and priorities, and the accountant takes care of the tax planning, it is up to the lawyers to make sure that the appropriate legal structures and documents are in place. Trevin Rogers is a partner, Baker


Newby LLP who works in agri- business and succession planning. “Forme, succession planning always


ties closely into estate planning,” says Baker. “In family farms, one of the big


issues is who is going to take over. It’s unusual that all of someone’s children are interested in running the farm, so


it’s amatter of finding a way to pass the farmalong to the children who are interested in participating, while providing for the non-farming children.” “Proper succession or transition


planningmeans that you are alive to explain to your children what you’re doing and why you’re doing it,” he adds. “Estate litigation is a growing area within the legal world.More and more often, children are not happy with what parents have done, and they are prepared to go to court and get lawyers involved to get what they feel they are entitled to.” Putting key legal structures in place


during your lifetime willmake it harder to challenge decisions froma legal perspective after the parents are gone. They also allow the older generation tomaintain some control and ease into the transition over a period of time with the farming children. There are threemain legal aspects to


transition planning: Corporate structuring:Most


farms are held through a company, and need to put amechanismin place to transfer shares to the farming


children and bring theminto the company. Shareholders’ agreement: This


agreement protects the farmand keeps company whole once you have brought the children in and parents are still involved. It outlines the roles of the parents and children and what happens in the event that someone doesn’t want to be involved, or what happens to a parent’s shares when they die. Wills:While the corporate


structure and shareholder’s agreement deal with the business, a will deals with the remaining interests with the farm, and with the non-farming children. Starting the conversation early and


getting the legal framework in place early is also important in keeping the next generation engaged in the farm business. “If you don’t put in place a


succession plan for you to wind down and involve your children in the business, by the time you’re ready to deal with it, no one is interested and you can be forced into a situation where you have to sell,” cautions Rogers.


British Columbia Berry Grower • Fall 2013 11


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