Len Davies founder of Davies Legacy Planning Group
Don’t think of it as retirement but as business continuation, advisor says
James Pascual
Farmers Forum
Most farms don’t have farm succession plans and this farm advisor says you need to start one soon by first calling it a business continuation plan.
In an interview with the Soil and Crop association last month, farm advisor Len Davies explains that farmers need to re-focus on farm continuation, succession, because this plan prepares for the future and looks at where the business is going.
When you think succession, “some people think that, well, I’m done and you’re in. A lot of farmers don’t want to be done,” he said. They resist succession planning as it implies retirement. But the plan for the farm’s future is not about an abrupt handover but the evolution and future growth of the farm, he said.
Business continuance (farm succession for those who insist) planning should begin as soon as you take ownership of the farm, said Davies, who operates Davies Legacy Planning Group and has helped more than 600 clients since 2003. He is based in Muikirk, in Southwestern Ontario.
Davies stresses starting early to position for future growth, skill development, management transfer, and estate planning. He made his pitch at the Southwestern Agricultural Conference in Ridgetown last month.
Davies advocates for a planning advisor or “succession quarterback”— an independent, holistic advisor (found via the Canadian Association of Farm Advisors, CAFA) — who coordinates accountants, lawyers, lenders, and insurers and gets them together around the same table with every family member so that everyone is on the same page.
You go to a doctor for a broken finger but if you have cancer you need a specialist, he said. The same applies when business continuance (farm succession). Interview a number of advisors for a good fit. Avoid advisors pushing products like life insurance alone, he said. Davies, for example, offers a free initial 30 minutes.
Plans are comprehensive, addressing debt structure, sibling dynamics, and skills (e.g., requiring post-secondary education or off-farm work) and they can seem like they can take forever. They take 1.5-7 years and often change due to life events, and require ongoing review via communication tools like group texts, production meetings, and quarterly strategic sessions with a designated leader. He recalled that one family milking 700 cows and not from Ontario took seven years to complete a plan.
Succession plans were a lot easier 20 years ago. “Now there’s so much more money involved.”
According to the Ontario Ministry of Agriculture, Food and Agribusiness, comprehensive succession planning (a full plan with professionals, including tax advice, valuations, shareholder agreements, estate documents, transition strategies) can cost from $5,000 to more than $25,000. Project-based fees for highly complex cases involving multiple generations, large asset transfers, or disputes can include retainers, phased fees or hourly rates from $250 to $600 per hour for lawyers and accountants.
Key challenges include distinguishing fair from equal treatment of children: farm successors get assets with debt and worries, while non-farm kids might receive down payments (as loans forgiven in wills for protection), life insurance, or real estate. As for sweat equity, it’s subjective—there’s no fixed formula.
Davies offers these tips:
Gift assets post-marriage for divorce protection.
Incorporate if taxes exceed $15–16K annually.
Test successors gradually by delegating management before ownership transfer.
Require disclosure of all history and finances for viable plans.
“Never give somebody a big chunk of money.” Loan them money to protect your money in case the spouse leaves and takes stuff with her or him.
The farm is a business so a shareholder agreement is necessary to protect the shareholders in the event that one marriage goes badly. It’s also much better than a will. “If somebody gets wonky when they’re older and changes their will, that isn’t a breach of contract.”
You have to plan for every scenario, like what happens when dad dies or what happens to the farm if the son dies. Does the daughter-in-law get the farm and get to cash out? Or does the agreement protect the other shareholders (family members) from anyone who might ruin the future of the family farm?
A lot of farmers hate meetings but you have to have them. Meetings are good when they are run well. Everyone needs to be asked what they want to talk about and that has to be put on the agenda. The agenda needs to be circulated a week ahead of time so that if there’s an issue, everyone has time to think about it and calm down. Meetings often don’t need to be longer than one hour because everyone has work to do. Don’t let meetings go two to three hours.
