Farm Financial Planner #15: A COVID Plan

A COVID-19 Plan Could Save the Family Farm

In a term of illness, a succession plan can provide for farm management

This article was originally published in Grainews. Grainews is an agricultural based publication written for farmers, and often by farmers, in a style they understand. Don and Erik work closely with author Andrew Allentuck, providing the background financial plans and theoretical analysis for Andrew’s Farm Financial Planner column.


Death may be inevitable, but the new reality of COVID-19 is that it can strike long before the end of a planned retirement. Having a Will and a plan for the distribution of farmland, machinery, inventory, and financial assets (i.e., stocks, bonds, and bank accounts) are usually done as distant contingency plans. COVID-19 is much more of an in-your-face, immediate threat. It may be remote, given the low Prairie infection rates, but in some communities, it has spread quickly. A plan for a COVID emergency is prudent.

The basic plan has to address the question of who takes over. Can the children, spouse, or siblings do it? A backup for the backup might be a professional manager for the farm and a trust officer at a bank or trust company. Alternatively, perhaps a committee of trustees who agree to serve as the operating executives of the farm. An interim plan until a manager or family member named in a will or power of attorney (POA) can arrive and act, is wise.

A draft plan can anticipate what can happen and prevent the worst of all alternatives. The worst alternative would be the appointment of a provincial trustee to run the farm. These trustees often do not know farming, might be young, untrained, and rush to sell farm assets. They may seek to do this even when land prices may be down or the farm itself is not ready for sale.

The very least a farm owner or manager can do is to review and update their Will and POA. The POA should name one or a chain of managers, define their powers, and what assets are to be managed. It should also name sources of cash, what bank or credit union, for example, list and name financial obligations, and name and discuss farm obligations to various associations and lenders.

Life Insurance for Farm Participants

Life Insurance policies should be reviewed. Conventional term or whole life policies provide cash for defined contingencies such as death and dismemberment. Mortgage life insurance, on the other hand, only indemnifies the lender leaving nothing for a borrower. Where life insurance for the owners of the farm and the farm itself is inadequate for perceived needs. Therefore, a review of cost and coverage is essential.

A separate, stand-alone life policy will be needed for the income needs of the surviving spouse. The needs of minor children should also be reviewed.

Ensuring Farm Longevity

If a sibling of the farmer(s) can take over the farm, it is important to consider their abilities and experience. If training courses are needed, the farmer can pay for them now or have a fund/account for that purpose.

In reviewing the readiness of a farm or farm family to deal with the sudden death of a manager or the actual owner(s) of the farm, alternative managers can include neighbours informed of a situation now and ready to take over in the future on a temporary basis if needed.

When planning a takeover involving any trust or trust company, it is vital to be able to change trustees if needed. Any trust agreement can appoint a bank to act as an active trustee with outside, that is, non-bank persons who know the farm family and is able to change trustees without cause. Locking a farm or any asset into the irrevocable control of an outside company is not prudent. It is an invitation to high-cost management that is not bound to make the best efforts to run the farm. The outside trustees should include farmers, neighbours, or friends of the family.

The drafting of a POA for temporary control of a farm should include a review mechanism. This could be an understanding that major changes must be reviewed by an alternate person acting under a POA. This could include the sale of land or equipment over some defined value levels.

The POA itself should be drafted by a solicitor who has some connection to farming. The connection could be via family or even location in a farming community. The compensation for the solicitor and those acting under a POA should also be stipulated. Finally, if the person(s) acting under a POA will have many months or years of responsibility, a review process by a family committee can be included in the plan.

A succession plan need not be for death. It can provide for farm management for a term of illness. COVID-19 seems to require months for recovery, after all.


All of this may seem bureaucratic and more paperwork than is really needed. However, pandemics are by their nature unpredictable. Furthermore, farms, which are rural and isolated from town hospitals and other resources, cannot be left unattended. Livestock, equipment, leases, mortgages, and loans must be addressed. The cost of lost access to a farm, seizure of assets by creditors, and death of farm animals are tragedies that thoughtful planning can avert. The old saying that it is better to be safe than sorry is never more appropriate than in a period of pandemic of unknown duration and severity.

Death comes to all of us. Pandemics can devastate not only active farmers and their close families but neighbours and even distant relatives. A plan to cope with the present pandemic is a burden. However, it can prevent an even greater burden – loss of an entire estate – in what could be a not so distant future.

Check out the last farm financial planner for more great content.

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Disclaimer: This Forbes Wealth Blog is for informational purposes only and does not constitute financial, legal, or tax advice of any kind. Please consult your legal, accounting, tax, investment, banking, and life insurance professionals to get precise advice relating to your particular situation before acting upon any strategy