Who will make the management decisions with respect to the farm?
This is particularly important if any of the children will be operating the farm with the parents, because the property stakeholders will be affected by management decisions. It’s advisable to document this management responsibility in writing to avoid future misunderstandings. Reducing Tax There are a host of favourable tax rules for the transfer of family farms. Not surprisingly, these rules are exceedingly complex. It’s critical for farmers to review their plans with their tax advisor to help ensure they can avail themselves of the following advantages: • Parents can transfer certain farm property to children for proceeds between tax cost and fair market value, depending upon the payment (if any) received by the parents. Planning can be undertaken to trigger the desired levels of income and capital gains in the parents’ hands. For example, it might be advantageous to trigger capital gains to utilize any capital gains deduction of the parents (see below). • A capital gain on the tran
