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Estate Planning For Rural Families 0, by Dick Heard, P. Ag.. Ontario Ministry of Agr. & Food. Farm Management Specialist. London. Ontario Most people have the wrong idea about the expres« sion "Estate Planning." To most people this expression implies the hiring ofu group of cigar smoking middle age men (or older) to draft tip some plan to keep the Government from getting all yotir money when you are gone! While there may be some element oftruth in lllltl‘iLlL‘tl. I want to give you some ideas about the more important aspects of Estate Planning. That is. about the Estate Planning that all of us are doing. and perhaps could do better. Estate Plannng is really the planning of your li- nuncial. business. and personal all'airs toward the al- tainmcnt of your personal obiectives. It is a highly per- sonal matter since the objective of estate planning is highly personal. No one can help you to develop a plan unless you indicate what objectives you have in mind. However. there are things that most people want. such as an “education for their children" that make it possible to make Estate Planning suggestions that will apply to many people. The first task in Estate Planning is to figure out ho“ to create an estate. An estate has been defined as "one's assets and liabilities". For most Canadians it in- cludes the ownership of some property. especially a house. a farm or a cottage. Almost everyone has assets such as a car. a camera. a sewing machine. etc. and lia- bilities such as a bank loan. a mortgage or a bill pay- able to Ontario Hydro or the fuel dealer. Therefore virtually everyone has an estate. but the size of the es- tate will be difl'erent between people. Estate creation can happen in several ways. The most common is by saving a portion ol‘one‘s earnings. For farmers this usually means the re-investment of farm income. A few people obtain an instant estate by winning a lottery. and many estates are created by buying life insurance and then dying! (Life insurance is extremely important and l have more to say about it later). Many other people receive some gifts from par- cuts. or indeed inherit sizable sums from parents. All these are methods ofacquiring an estate. The only one that the individual person can do much about. and live to enjoy the fruits of his labour. is that ofsaving a portion of the money earned. And the amount of money earned depends on the person‘s skills in the market place to a doctor. school teacher, welder. etc. or his skill as a businessman cg. farmer. merchant. etc. Every person has the choice of using up all the in- come for personal living. or to ration the income into a portion for personal living and a portion for savings. Naturally. if the income is high. it takes less sacrifice in order to set some aside as savings for future use. lm- mediater one sees that personal choice is a prime fac- tor in estate planning. and might well provoke the 26 question “why save?“ The an5wer is not so on m most people have a desire for security and 1nd . my cncc and having “something saved up for a rillll it" helps to achieve this objective. - ' ln starting up a farm business a young pl.- might well consider how they are going to organ the business. Will it be as a sole proprietorship. on. bandâ€"wife partnership. or as a corporation? spilt .mg not permit a discussion of the relative merits m .. h. but at present it does appear that there is a to Mt advantage for many farms to be operated as p. .r. ships between spouses. This is especially true he farm is earning a good level of income as it men in each partner would be paying his or her own a llt‘ tax. and both would be participants in the t in Pension program. The result is that the incun m bite on the family is smaller, and the potential ( . i4l;t Pension benefits much larger than would be the r 'lli the business was conducted as a sole proprietu o When a young couple buy a property thw or farm) the question of how title to the property i he held must be faced. Title could be individually I: by one or the other. Or it could be jointly held. e1: .l‘ joint tenants or as tenants-in-common. lfthe Pli in is registered as joint tenants between “Mr. ant .r-x Smith“ the most significant thing is that the pit ill‘ will automatically pass to the survivor should It-r spouse die. This transfer to the survivor can l he changed by a Will. On the other hand. owner! .i~ tenants-inâ€"eommon. means that each person ha~ n- tinct separate interest in the property such ll'ltli .li person’s interest will not automatically be inherit W). the survivor but rather will be transferred accord to the dead person‘s will. So you see. that one of tlt rli decisions in Estate Planning comes when you ‘ LI piece of real property. Farm families have at least one big difference rm most of their city counterparts. That difference ‘ Al the farm family owns the place of business and it sets used in that business. The school teacher dot 'nl own the school. the classroom. the desks. ete. nw it“ the industrial worker own the factory. the factor 1.!» chinery. or the raw products. The farm famin y. it» fore is typically confronted with the problem ol I We vast amounts of credit in order to purchase the ‘ rm and assets needed to make it a viable business .ml the probability of being “deeply in debt“ for mu nl one‘s working lifetime is one reason why farmers M‘ special life insurance needs. Most farm l‘amiliex H“ to have their affairs arranged in a mannner that ii tlIC husband died. his wife would be at least free of t‘rhl This enables her to have the option of continuing flit farm operation. or selling out. Most farm famiin