Inter-generational farm transfers are common as
succession plans. When parents transfer farms to their kids, they
have rights that other business owners do not have. For example, if
a farm or fishing property meets the criteria for a favourable
intergenerational transfer, they can transfer at less than fair
market value. However, many farming operations function as
unincorporated partnerships, which can lead to complications.
Typically, this is a mom and dad type scenario, where both parties
are individuals farming multiple pieces of land, and they want to
transfer one piece to the next generation.
In these cases, people often think they can transfer one piece
of the property at any value between cost and fair market value
because it's qualifying farm property. While this is true when
the transfer is from an individual to his or her child, it does not
apply when the property is owned by a partnership. In the case of a
partnership, there are certain steps that need to
