By city

Infinite Banking in Abbotsford

Abbotsford sits in the Fraser Valley under Mount Baker, on some of the most productive farmland in Canada. Where land has appreciated across generations, succession is usually the real financial question, and it is a different question from this strategy.

The city of the valley floor

Abbotsford lies on the Fraser Valley floor with Sumas Mountain to the east and Mount Baker filling the southern horizon across the border. It is one of the most agriculturally productive areas in the country: berries, dairy, poultry and greenhouse crops on land that has been farmed by the same families for generations. The Fraser River runs along its northern edge, and Abbotsford International Airport sits in the middle of it all.

That combination, farmland held long enough to appreciate substantially, family ownership across generations, makes one question far more important here than the one most readers arrive with.

Succession is the real question, and it deserves to come first

Canada has no estate tax. What it has is a deemed disposition at death: capital property is treated as sold at fair market value, and the accrued gain becomes taxable in the final return. For farmland that has risen in value across one or two generations, that gain can be very large, and the resulting bill lands on the estate while the value itself stays locked in land, quota and equipment. The land cannot pay the tax on itself.

Life insurance has answered that problem for a long time, entirely independently of any strategy. A policy provides liquidity at the moment the tax falls due, so the next generation is not forced to sell part of the operation to pay for inheriting the rest.

Here is the part that matters most on this page: if that is your actual problem, you may need insurance and not need this strategy at all. They are separate questions. An honest practitioner will tell you which one you have rather than selling you the more elaborate answer.

Two things that need a British Columbia accountant rather than a web page. Qualified farm or fishing property has its own rules under the Income Tax Act and its own capital gains exemption, distinct from the qualified small business corporation tests. And intergenerational farm transfers carry specific rollover provisions that can defer the gain where the conditions are met. Whether a policy is the right tool depends on whether those apply to your operation, and that is arithmetic about your own land rather than a general principle. Get the number calculated before you listen to anyone talk about a policy: if it is modest after exemption and rollover, there may be nothing to fund.

Income that arrives with the season

Berry and greenhouse operations do not receive income monthly. It arrives with the harvest, and the amount depends on yield, weather and price, none of which the operator controls. That is the risk profile this strategy handles worst.

Premiums sized against a strong year will meet a poor one. Cash surrender value stays below cumulative premiums for many years and commonly more than a decade, so an early exit is a loss. If the contract draws an automatic premium loan against cash value to stay in force, that is a real loan with real interest owed to the insurer, not a courtesy; it grows quietly and compounds at the policy anniversary. Size the base premium against your worst plausible year and put strong-year capacity into paid-up additions, because in most contracts the base premium is the binding obligation and additional deposits are the flexible part.

BC rules and where it does not fit

Insurance in British Columbia is supervised by the Insurance Council of British Columbia, which is not ICBC. ICBC is the provincial auto insurer and has nothing to do with life licensing. A professional here holds the licence of Life Insurance Agent. British Columbia has not enacted title protection legislation, so financial advisor and financial planner are less constrained here than in Ontario. Verify the licence with the council and ask how the person is paid.

An operation carrying operating debt, or one that may need every available dollar for land or equipment in the next few years, should not be funding long-dated premiums. Neither should a household without an emergency reserve or carrying high-interest consumer debt.

Nothing on this page is advice. No assessment has been made of anyone reading it, and the author is not a neutral party: he is licensed to sell the contracts this strategy uses and is paid a commission when one is placed. Take anything useful here to an accountant who works with farms and a lawyer who handles succession.