Very Touchy Subject....Divorce

[farmaholic]

With the divorce rates where they are today, how do you protect a generational farm?

I am on the record here as saying I will likely never fully enjoy the full value of the farm because it won't get sold to my kids at full market value. lots will likely be gifted. Yet if my kids get divorced, I haven't been paid fair value but their spouses are entitled to half of full market value? How is that fair? Some people could become millionaires just by "association", osmosis.

Matrimonial property laws are ****ed. They don't take into account the contribution from parents or the fact that it was established but only acquired after marriage. Does the homestead law actually apply anymore? Does Alberta and Manitoba still have the homestead law regarding divorce? Surely a house is fair game(in most cases) but a yard full of expensive outbuildings? Prenuptial agreements encouraged by the contributing parents makes them look like assholes. The thing is, I never chose or married my kids' spouses but they are somehow entitled to the assets I'm contributing to my children?

As you can see the comments are very gender neutral! It goes both ways!

[bucket]

The correct term is gold diggers.....

[farmaholic]

I don't think that is always the case or intent but when things go bad if they are willing to take what isn't rightfully(MORALLY) theirs..... I would tend to agree with your assessment!

[sumdumguy]

You are right farmaholic. I once attended an information night put on by a lawyer in Regina about estate planning.She told the story about an elderly couple who had one adopted son. For his wedding gift they gave him the farm a few miles out of the city. The parents who adored that farm yard were not allowed back by the new wife. The marriage lasted a short time. The son was so dispondant that he told the wife " to have it all " . He was out of there. Story indellibly engraved on my memory.

[farming101]

Lots of ways to do this so that your interest is protected till it doesn't matter.
But there is probably one best way depending on you and one chance to get it right
Find a financial planner. The numbers are just too big these days

[farmaholic]

I'm all ears!

[farming101]

If you were asking me for further advice, I hesitate to offer any. I'm not qualified
The grainews articles by Allentuck that are a regular feature are good for free advice and ideas
A financial planner or top shelf accountant can be invaluable. You can always fire them if they don't measure up

[sk_wheatking]

Pretty simple, pre nuptial agreement done by lawyers working separate from each party. It's a binding agreement. It should be reviewed often also. If either party won't sign it then that should be all you need to know. What's yours before can be yours and hers the same. What you aquire during marriage and your matrimonial house us 50/50. At the very least it protects each party involved for the first few years of marriage. Things can get complicated after years and years of marriage though.

[farmaholic]

In many cases spouses don't work together anymore like previous generations. Each has their own careers. That is the type of arrangement I am most concerned about regarding a farm.

I realize they each can have their own assets before marriage and they're protected in the law. It's the scenario I opened the tread with that concerns "me".

101...you said it....not looking for advice but ideas and discussion. People's experiences.

Let's not forget the welfare of the children. Above all they shouldn't suffer in any way from the result of the parents inability to live together. Too many times they're used as pawns and leverage to make the warring factions lives miserable. Sad.

[fjlip]

I was included in a TRUST for 40 years. It was improperly worded and everyone in it had their hands tied by 3 ambiguous words. Very effective but not sure if I would dare. Depends how important your contribution to the farm is to you. My grandfather controlled the outcome 40 years after he died! Get a good lawyer and you can safeguard your estate. The beneficiaries might not like it but it will be too late. Most wills can be broken. Good luck to all. Or sell the whole thing and bequeath $$$.

[GDR]

Understandable concern but pretty sensitive issues that could create lots of hard feelings if not approached properly. Inheritance is protected but don't believe there is the same protection of gifts/ transfer.

The advantage of bringing in a professional is that it can be their idea not yours to include a solution to deal with the spousal concern.

Biggest mistake farm families make is lack of communication. Everyone including farming and non farming children and spouses all need to be involved and heard.

As an idea what about transferring the farm at full market value but have a portion in the form of a callable loan to the kids, don't ever have to take a payment or interest but if you have a registered mortgage you have the ability to send half the mortgage with half the farm.

[farmaholic]

Fj....an asset is an asset is an asset. .....what are your "intentions" with yours? Who are your INTENDED "beneficiaries"?

[fjlip]

Two sons, one more interested in the farm than the other. The new partner/wife is always the uncertainty. A immediate concern before grandchildren is a common death of your child and his/her spouse. If the in-law is younger that person is deemed to die last, and without a will, ALL your assets go to in-laws next of kin. Scary. But very low risk. We can not stop all consequences. But if you are deceased, a bad result will not cause you stress, just thinking of all negative out comes now.

[Richard5]

I might be suggesting a family trust to own the farm company shares because that is what I am doing in hopes to transfer the farm to my one son that is interested in taking it over. I do have one other child and this also works for him too as it allows me to strip cash out at dividend rates. A proper set up trust should be able to handle things Farma's topic is describing

I know FJ has expressed misfortune of being involved with a trust in the past but could it be that it was set up in a way that was not able to look out far enough. Trusts only last 21 years so it had to have been changed or renewed to last 40....

I would not suggest a financial planner would necessarily be fully educated to handle this either. Some no doubt will be but its just like an accountant, lawyer, mechanic, plumber - EVERYONE is different, have different skillset and experience to offer - Even if they work in the same building.

I think too often we are too trusting as farmers and people and think that everything we hear from a so called expert that we think has the knowledge.

Specifically, sucession planning. I have been spending some time reading and going to seminars. Often its some guy or group of guys talking about creating partnerships and incorporating. In my mind that is the final step but 4-6 have been missed. I think we need to be looking more at the true profit potential of the farm first to see if it can financial support the transfer. In addition to that depending on how many people involved, is the process looking out into the future enough to allow flexibility for the next generations hurdles.

If investment guys do succession planning, its seems to be all about how much do I need to retire and when there isn't enough then life insurance is suggested.

I don't even know much about vacationing outside Canada, how the heck would I know about how much I need to retire. Maybe I need to read more of S3's Friday vacation tips

[SASKFARMER3]

Vacations on a dime!

Really you need to eat at home, you use gas/diesel in your truck at home so only extra is your lodging! And if you bought right not a big cost!

We're working on ours it takes time and good lawyers and accountants. Costs a bit but hopefully done correct.