Don't let fear stop you! by Perry Pellegrini
November, 2009
In my field of practice I talk with many people about the liquidation and sale of a farm operation, from farmers to accountants, lawyers, auctioneers and realtors. A common theme I'm hearing right now, is concern about what you might do with the money if you did sell.
Many want out, either for lack of profit reasons or retirement reasons. They just seem to be frozen over the "what comes next" part. There is a concern over real estate prices softening and financial markets falling, not to mention some of the fraudulent money grabbing schemes that have made the news.
All of this seems to support a sense that, "We might as well keep the farm assets, at least we know where they are." In this environment, fear is driving decisions that may not be in your best interest. The best way to tackle fear, or any other emotion impacting on decisions, is to focus on facts and a well thought out planning strategy.
Over the past year and a half, I have written about the taxation of farm assets, tax saving strategies, retirement income planning, securing cash flow, suitable investing and estate planning. Getting a clear picture on all of these issues should be an important component in your decision making.
As winter approaches, take the time to understand what a sale would mean for you. What assets would be sold? What are they worth? What would the tax liability be? Do options exist to reduce the tax?
From here you can explore other planning issues. Where will you live? What will it cost? What will you do with your time? What cash flow will you require? This is an exercise worth going through even if you ultimately do not sell your farm this year.
What you would do with the money from a sale is probably one of the biggest stumbling blocks this year. It shouldn't be. Take the time to investigate your options. Don't rely on what your neighbor says or what you hear in the media. Sensationalized stories (positive or negative) are intended to capture your interest, not secure your future. The fact is, there are strategies that weathered last year's storm, and there have been tremendous opportunities throughout 2009.
Products and strategies, such as GIC Ladders and Variable Annuities, exist to secure income needs and provide growth opportunity. Seek them out. Understand them (and others). See how they might achieve your objectives and allow you to make a comfortable transition from farming. If all other things tell you the time is right, a planned exit will relieve your farming stress and simplify your life (and eventual estate).
If you are ready to sell or retire, but are holding off because you don't have a clear picture of how the sale would look financially and what your life might look like afterward, deal with it! Professional help and resources exist to help you through the process.
Perry is a senior partner with Pellegrini LeBlanc in Red Deer, AB, which focuses on farm sale and financial planning throughout Alberta.
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