Financial services in Camrose

You own the land, you rent it out, and nobody in the family farms. CWCC works with Camrose families, retired farmers and business owners on wealth creation, insurance and succession. The firm is licensed to place insurance in Alberta with the Alberta Insurance Council and matches you with an advisor licensed in the province. Every meeting is held online.

Where to start

Camrose County describes agriculture as the foundation of its economy, with roughly eight and a half times the agricultural employment concentration found in Alberta generally, and calls itself one of the rare Alberta communities not dependent on oil and gas. The city holds the University of Alberta’s Augustana Campus and St. Mary’s Hospital. Two very different households live side by side here. Choose the one that looks most like yours.

What you get

Seven areas, one team, and your accountant and lawyer in the conversation when the question belongs to them. On a land file that is not a courtesy: it is the only way the work is done properly.

• Wealth creation. RRSP, TFSA, FHSA and RESP, ordered around income from rent and savings rather than from a salary.
• Capital strategy. Infinite Financial Sovereignty®, described below.
• Life insurance. Term, permanent and participating whole life, sized to a tax bill that is calculable years before it falls due.
• Living benefits. Critical illness, disability and long-term care, which come to the front in an older household.
• Investment options. Segregated funds and education across the full menu available to Canadians.
• Group benefits. For your company, and a proper read of the plan you already have.
• Succession planning. The land, the shares, the Capital Dividend Account, and an estate that can pay what it owes.

The quarter you rent out, and the assumption underneath it

A very common Camrose situation. The couple farmed for thirty or forty years, wound the operation down, kept the land and rented it to a neighbour who farms it now. The rent arrives every year, the land keeps its value, and the arrangement is comfortable enough that it has not been examined since it started.

Two facts sit underneath it. The land was bought decades ago and is worth a great many times what was paid, so the accrued gain is large. And on death, capital property is generally treated as having been disposed of at fair market value, so that gain becomes taxable in the final return, payable in cash.

Here is the part where families get caught, and we are going to state it as a question rather than an answer. Farm property transferred to a child can often be rolled over at cost, and the lifetime capital gains exemption may apply to qualified farm property. Almost everyone who has ever owned farmland has heard both of those and assumes they apply. Both depend on tests in the Income Tax Act concerning who used the land, how it was used, and for how long. A quarter that the family has not farmed for fifteen years and that is rented to a third party is precisely the case where those tests need to be checked rather than assumed.

We are not going to tell you the answer for your land on a website, because the answer depends on your history, your ownership structure and the wording of your arrangement with the person farming it. Your accountant can tell you, and it is one of the most valuable hours a family in this position will ever buy. Ask a single question: if this happened this year, what would the estate owe.

If the number turns out to be small, the file is closed and everyone sleeps better. If it is large, there is time to deal with it, because you are alive and the number is known. Life insurance is one way to produce a specific sum of cash on the event that triggers the liability, and it is one option among several rather than the only one.

A large asset that does not produce the cash you need

The second Camrose problem is timing, and it arrives before the estate does.

Farmland rent is modest relative to what the land is worth. That is fine while a household is healthy and living within its means. It becomes difficult at the point where care is required, because the cost of care is a monthly cash number and the land is not a monthly cash asset. A household can be worth a great deal and still be unable to pay for what it needs, which is a sentence that describes more retired farm families than anyone expects.

Provincial health care covers a great deal and does not cover everything. The difference between what is covered and what a family actually wants for a parent is paid privately, and where the adult children have moved to a city, the practical answer is usually that the parent pays from savings.

Selling a parcel is the obvious solution and it is worse than it looks, because a sale during your lifetime triggers the gain immediately and in a year of your choosing rather than of your planning. That is not an argument against selling. It is an argument for knowing the consequence before the decision is forced, which is the same argument as the section above and the reason both sections end in your accountant’s office.

The other half of this is the one people avoid. Children who live in Edmonton or Calgary do not generally want a quarter section, they want a share, and a will that leaves land in equal undivided shares to three adults who live in three cities is an arrangement that will be resolved by a sale, on terms nobody chose, in the year everyone is grieving.

If you work in town rather than on the land

Camrose is also a university city and a regional health centre. Augustana Campus, St. Mary’s Hospital, the school divisions and the trades employ a large share of the households here, and those households look nothing like a land file: steady employment, an employer plan, and the ordinary questions in the ordinary order.

That order does not change here. Enough term protection while there is a mortgage and children at home. Disability coverage read rather than assumed, because it is the coverage most likely to be needed and least likely to have been examined. A cash reserve. Then everything else.

One local point is worth naming. In a smaller city a household often holds a house that could not be sold quickly at a price it would accept, and a job that is one of a limited number in its field. That combination argues for more liquidity rather than less, which is the opposite of the advice written for a large market.

The strategy

In almost any financing arrangement, someone supplies the capital and someone else owns the structure it moves through. Most people occupy neither role. Infinite Financial Sovereignty® is about changing which side of that you are on.

It draws on the educational approach known as The Infinite Banking Concept®, set out by R. Nelson Nash in his book Becoming Your Own Banker®. CWCC is not affiliated with, sponsored by or endorsed by Infinite Banking Concepts, LLC.

In practice: capital accumulates inside a participating whole life contract issued by a Canadian mutual insurer, on a tax-deferred basis, and you reach it through a policy loan from the insurer rather than by applying to an outside lender.

Where this belongs for a land holding household, said honestly. The relevant feature here is not accumulation, it is liquidity at a known event. A household whose wealth is a large illiquid asset and a modest rent has a specific gap: cash, at death, in an estate that holds land. A permanent contract addresses that gap directly. It also asks for a premium every year for a long time, and a household in its seventies faces a different cost of coverage than one in its forties, which is a fact to look at squarely rather than around. Where the premium does not fit, we will say so and the conversation moves to the other options.

Three points, without exception. A policy loan is a real loan, it accrues interest, and it reduces the death benefit while it remains outstanding. Dividends are never guaranteed. And this is insurance rather than a deposit account: protection comes from Assuris, within its published limits.

The full mechanics, including an entire chapter on where the strategy does not fit, are set out in Infinite Financial Sovereignty®, Simplified.

For the incorporated operation and the business owner

Many farms here were incorporated years ago and the corporation has outlived the farming. What is left is a company that owns land, holds some investments and no longer has an operation, which changes the questions rather than removing them.

Shares replace land as the thing that passes, the shareholders’ agreement becomes the document that decides what happens, and the Capital Dividend Account becomes available. Whether the shares still qualify as shares of a family farm corporation for tax purposes is another question for your accountant and not one to assume, for the same reason as the section above.

Where a corporation owns and is beneficiary of a policy, the death benefit generally credits the CDA by the excess of the proceeds over the adjusted cost basis, and that balance can be paid to shareholders as a capital dividend, generally free of tax subject to the rules in force. It depends entirely on how the policy is owned, and a policy held by the wrong entity can create a taxable shareholder benefit rather than the intended effect.

Where there is more than one shareholder, a buy-sell clause with no funding behind it is a promise that the survivor will find a large sum in the year the business has just lost a principal. In a family corporation that survivor is usually a sibling, which makes an unfunded clause a family problem as well as a financial one.

Who this fits, and who it does not

It fits a family that owns land it no longer farms and has never had the tax position confirmed, a household thinking about care costs, or a person in town who wants protection sized properly before anything else.

It does not fit someone looking for a short-term investment. A participating whole life contract is a long-horizon instrument and the early years are the expensive ones. It does not fit a household that cannot comfortably sustain the premium, and at older ages that is a real constraint we will name rather than work around. And it does not fit anyone hoping to be told that a strategy will outperform a market, because that is not a claim this firm makes.

The first meeting

Thirty minutes, online, no cost and no obligation. If land is the subject, the useful things to have nearby are a rough current value, roughly what was paid and when, the rental arrangement, and whatever your accountant last said about the capital gains exemption. If the answer to that last item is that nobody has ever asked, that is the most useful thing you can bring.

Frequently asked questions