Thinking about living arrangements is an important part of succession planning. This topic considers who will live in the primary farm house, what will happen to other living quarters and residential land currently on the farm, and who needs to have eyes on the farm most often.

Action Point

If you haven’t done so already, bring your advisors into this decision-making process

There are a few things to consider.

 

What to think about

  1. How will the owner and successor need or want to be involved in the farm in the future?

  2. How much control will the retiree have in the farm operation over time?

  3. How suitable is the primary homestead for the retirees as they age?

  4. How much responsibility will the successors have for day-to-day operations over time? Whoever is closest to the farm will likely have the daily responsibility to check on things.

  5. Do you want to watch what happens on the farm every day/minute? Maybe the retiree will enjoy a bit of distance.

  6. The next generation will likely do things differently than the retiree. Will that bother you if you see it daily?

  7. How do non-farming children factor into living arrangements?

Next Step

Mark complete and continue on to get some tips on making decisions about your living arrangements.

 

 Some tips

If the farm house or other dwelling is owned by the company, you can’t claim the principal residence exemption.

Consider creating an agreement for future living arrangements, especially if current owners will remain on the property after transfer of ownership of farm or the farm house to the successor. The Agreement should clarify who is responsible for what expenses (i.e. utilities, repairs, insurance, taxes).

You should likely consider what happens when the successor wants to transfer the farm and/or farm house to their own successors down the road. Does the house go with it? Do those dwelling in the house continue to have a right to live in it? Likewise, if the current owner retains the home and wants to sell to a third party, would the successor expect a right of first refusal to be able to buy it first? If so, then this should ideally be in writing and recorded on the property. In some cases with families, the home might instead be gifted in the parent’s will.

In many cases the house and the farm share access to the property (i.e. the same driveway or same well), which means one may have an easement over the other. It would be important to have this in writing and recorded on the parcel at the Land Registry.

Next Step

Mark complete if you're ready to look at your own options for living arrangement

 

Develop and evaluate your options for living arrangements

Assignment

I’m ready to evaluate my living arrangement options