Ralph Waldo Emerson said, “Your health is your wealth,” and yes, that is very true. Yet I have met some people who are in prolonged family feuds about how the farm’s wealth is going to be transferred to them as non-farm siblings.
The Canadian Inheritance Study (Decima Research) says boomers stand to inherit more than $1 trillion between 2006 and 2026. The shift in wealth gets even bigger from 2026 to 2036. Those over age 75 are wealthy, and roughly 45 percent of these “givers” are widowed.
This concerns me as a farm coach. I see many elderly farmwomen seeking wisdom. They are being pushed to do things they do not understand or do not feel good about. They also feel invisible in planning meetings with professional advisers, who sometimes don’t do a great job of protecting the elderly’s income stream for the next two decades.
The receivers who are going to benefit from the great wealth transfer are aged 50 to 75, the ones with heaps of debt. The average inheritance for this group in the prairies has been $100,000.
The impact on real estate may be that inheritances will be of the inter vivos variety – that is, during the lifetime of the parent rather than waiting until they die. Farm successors who need equity to leverage money for mortgages are happy when parents can help out with land down payments.
This need for securing real estate for farm growth also increases the sense of “unfairness” with non-farm heirs who would like help to pay off their real estate debts, too.
One-fifth of beneficiaries in the CIBC study by Benjamin Tal indicated they would use an inheritance to reduce debt. It gets really tricky when boomers and others depend on their inheritance to pay off their growing debt. This is where I heard, “It would be so much better if Dad would just die.” Ouch.
The National Post has called this a “nation of waiters,” as in waiting for parents to die. There is a growing trend of young people banking on receiving an inheritance and spending it before it arrives (by borrowing to get an advance).
If you are one of the 1.5 million Canadians counting on inheritance to be your primary source of funding for retirement, I think you are foolish. You need to see a financial planner now to figure out how to best track your expenses and generate revenue for your future. Expecting your parents to fund your retirement nest egg sounds like a dangerous path to go down.
Another big risk is the lack of candid conversations between generations. You need to talk. You need to kick-start financial transparency between the givers and receivers.
As a farm family coach, this is my main aim: to help families break the silence on what the transfer of wealth looks like. Older folks born before 1950 may think talking about their wills, their income needs and their wishes is taboo.
This is 2018. Land is expensive. The cost of living rises every year. Funerals are over $10,000. You need to talk. You might not like the fact your parents plan to leave a bequest to charity as part of their legacy.
Your parents might feel it is important for you to make your own way financially and create your own wealth. Williams said, “It is not a birthright for children to be automatically entitled to their parents’ assets.”
A proper discussion of the parents’ plans and their rationale would go a long way to mitigate ill feelings and misunderstandings.
I had that talk in July 1998 with my parents. My mother was dead six weeks later. People need to talk to their executors, share their intentions with family and discuss the terms of the will.
Farmers don’t typically like to ask for help. They also don’t easily part with their hard-earned cash. It’s time to stand tall in your legacy plans and get fee-for-service financial advice to manage inheritance desires and have a proper valuation of assets, not to mention tax efficiency upon death.
Canadians are living longer, and parents may not have the funds they need to live with more expenses as they age. It saddens me when the heirs forget this key point.
The suffering farm grandmother is a scenario I have seen too often. Unforeseen events and health emergencies can eat into savings quicker than anticipated.
If your mom or dad needed financial support, do they know they can count on you and your farm cash flow to help them out? Have you had that conversation?
Census Canada reports 43 percent of Canadians 65 or older are single. Being single in retirement can have an impact on income and expenses. Divorce in mid-life happens for 33 percent of marriages before the 30th anniversary, so “ditching your spouse” is real.
When it comes to outliving your spouse, there is a 50-50 chance one person in the couple will make it to age 90 and a 25 percent chance one person will make it to 94.
Married adults who become divorced or widowed between age 67 and 80 are projected to have the largest decrease in wealth and the largest increase in poverty. Hard news. Raise generous and gracious children.
Boomers are called the Sandwich Generation, providing care and financial assistance for aging parents while helping adult children and grandchildren. Life can get pretty interesting and stressful in the sandwich.
I suggest you use this article as a discussion guide with your farm family. No surprises. Talk about your hopes, dreams and wishes to secure legacy. Understand: It is not the job of parents to make everyone in the family economically equal.
I was deeply loved and cherished by my mother. Her legacy of love was the best inheritance I could ask for.
One last thought: “The most compelling reason fortunes are frittered away is because younger family members are ill-prepared or unwilling to shoulder the responsibility of wealth stewardship,” Williams said.
Get a financial planner on your team now. We all know families can be destroyed and ripped apart over money. 
Elaine Froese, CSP, CAFA, CHICoach, is rich in relationship and uses financial planners. Farmers have a strong work ethic, and that is a growth gift you can pass along to the next generation. Visit Elaine's web site for more information.
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Elaine Froese
- Certified Farm Family Coach
- Email Elaine Froese
