Last updated: Apr. 27, 2022
Little by little, one farm successfully changes hands
It’s not often you hear someone describe their farm transition as “flawless,” but that’s just how Denis Boucher labeled the experience. For as long as Denis can remember he wanted to farm, so his parents did everything they could to make that dream happen. They knew from experience that time was an important factor in making the transition a successful one. For this reason, discussions started early on.
Nothing fuels a conversation like bad experience; unfortunately, that’s just how Denis’s father describes his own transition. He and his brother, Denis’s uncle, had also always wanted to farm. But when it came time, their father’s plan consisted of little more than a question: Do you want to buy the farm? Yes or no. The proposition came with a hefty price tag and no family discount.
“It crippled them,” said Denis. “They just about didn’t make it. If my dad and uncle were to do that to me, it absolutely would have never worked out.”
Denis and his wife, Lizanne, bought their first quarter of land in Smoky River No. 130 in northern Alberta back in 2007. The property came with a house, a grain handling system and was situated just one mile from Denis’s parents. Whereas his siblings chose to work off-farm, it was obvious from the beginning that Denis wanted to take over the family business. Serious discussions began after the couple bought that first quarter. The family agreed to stretch the process out as long as was needed so as to avoid putting too much pressure on Denis.
Using his father’s equipment, Denis began farming the land he’d entrusted into his parents’ operation. From there, he drew a living wage. At the time, he was also working as a journeyman mechanic, a job he worked for four years following college. His parents had wanted him to get a trade and experience life out in the workforce, and so he studied heavy equipment repair.
While the family had a plan, it didn’t have a timeline. His father was 50 when the transition began, and still eager to work. Eventually, though, he expressed interest in slowing down.
Working closely with their accountant, the transition took place in three transactions. The corporation is structured with preferred, non-voting shares and common, voting shares. At each of the three stages, assets were frozen and rolled over as preferred shares to the outgoing generation. While they’re not paid out entirely, they have a large amount of preferred shares in the company. Should they pass before all shares are paid, they’ve agreed to forgive the preferred shares. Life insurance policies take care of Denis’s brother and sister.
“As years go on, I keep paying Mom and Dad a yearly amount out of these preferred shares,” said Denis. “Meanwhile, my wife and I own 100 per cent of the common shares in the company.”
Adding a second family to the farm meant expanding its acreage. Over the course of 13 years, Denis was able to expand farmed acres from just over 3,000 to 7,000 acres.
There was one hiccup in the plan, and that was Denis’s uncle. When he unexpectedly divorced, Denis and Lizanne bought his shares outright, but he kept his land. The couple has first option to purchase his land if he chooses to sell. Because of the indefinite transition timeline, Denis said the divorce, while unforeseen, wasn’t a curveball. It just meant putting other parts of the plan on the backburner for a time.
The day-to-day operations were also transitioned in stages over multiple years. In the first year, for instance, Denis’s father gave him the task of procuring seed. In the second, he was responsible for herbicides, insecticides and fertilizer. In the third, he took over the task of scouting fields. While his father allowed him the freedom to make his own decision, he was always on hand, ready to offer guidance if needed.
“You need to make sure you’re not going to make a bad decision that affects the farm,” said Denis. “Once he gave me a job he never took it back.”
Taking on each task slowly allowed Denis to build experience and confidence in his ability to run the farm alone. It also allowed him to try out new technology or crops. One year, for instance, he expressed interest in adding peas to the rotation. His dad remembered poor experiences with peas, and said he wasn’t interested try them again. But Denis insisted. His dad yielded and allowed Denis to do what he felt was right. They’re still growing peas today.
The last task Denis took on was the bookkeeping. Before him, it had been his mom’s job. “I love doing the books,” he said. “I find you get a different picture of your farm when you do the day-to-day bookkeeping. But I still call my mom when I have questions.”
The key to the success of his transition was flexibility—that, and getting a head start on the process, said Denis.
“You have to start early, the earlier the better,” he said. “Even if you start early and drag it out longer, in my opinion, that’s better than starting late.”
Denis is thrilled with how his transition went that he’s considering doing the same for his children, should they also choose to farm. He would, however, like to save up a significant amount of capital ahead of time for the exit strategy. Doing so would lighten the financial burden for his children. But other than that, he’s happy with how his transition went.
“I feel like if I had to do it over again, I wouldn’t do anything different,” concluded Denis.
Denis and Lizanne grow cash crops—wheat, canola, peas and barley—on half-owned and half-rented land. Denis is the fourth generation on the farm. He and Lizanne have three young children, one boy and two girls.
Download the full guide to Transition Planning for Farmers here:
Developing a succession plan is critical for increasing the value of the business you’ve worked so hard to build. It will also help minimize risk and help provide you with financial security.
FBC has 70 years of experience helping farmers, small business owners and tradespeople develop unique succession plans that help then successfully exit their business on their own terms.
Since 1952, we have worked exclusively with small business owners, farm operators, entrepreneurs, and independent contractors. Over the years, we have helped tens of thousands of customers from coast-to-coast, with customized tax services, including succession planning, financial and estate planning, business planning, bookkeeping, payroll, and tax preparation and optimization.
We understand that no two people have the same accounting and tax preparation needs. Take 15 minutes with us, let’s get to know each other. Book your free consultation online or call us at 1-800-265-1002: