Protecting Your Assets

Potential marital problems can be concerning when considering whether to bring a child into the ownership group of a farm operation, but there are legal tools available to help limit risk. Some options include:

• Marriage contracts that limit the ability to access farm assets of the family farm business
• Gifting farm assets to children after they have married.  Farm assets could include shares in a family farm corporation or an interest in a family farm partnership.  The gift should be recognized by way of a Deed of Gift, possibly resulting in the value of the farm assets or shares or partnership interest being excluded from Net Family Property
• Completing a Deed of Gift to document significant gifts made to a child during his or her marriage including gifts of shares or partnership interest in a family farm operation as noted above.
• Having a partnership agreement or shareholder agreement that contains provisions allowing other partners/shareholders to purchase the interest of the child with marital problems, ensuring that non-family members do not have ownership rights
• Having any debt owed by the child to the parents secured by a mortgage on the farm properties in favour of the parents.

The potential for martial problems is a common concern when considering whether to bring a child into the ownership group of a family farm operation. Though it’s an unpleasant issue to address, having an honest, open discussion about it is vital to minimizing risk and protecting the family operation. With the right guidance and advice, parents, children and spouses can move forward and ensure that the multi-generational operation is properly preserved.