Farm Table says:
Paul Neiffer, US Farm CPA Blogger identifies steps to be successful in the farm succession planning process and things to avoid.
Do These Things:
- Think of farm succession planning as a journey, not a destination.
- Complete a financial analysis of the past and present farm business. A project where you think it will be in five years. If the farm is not making money or cannot support all of the families involved, what can you do to change it?
- Become educated on succession planning. Participate in workshops and seminars, read articles and stay involved.
- Consider using a family business meeting to open lines of communication. An objective third-party facilitator can help the process.
- Determine the most important values and priorities for each family member. Some of them might surprise you.
- Figure out each person’s personal, family and business goals.
- Address the issue of fair versus equal division of the farm early in the process, especially if non-farm family members are involved.
- Develop a successor development plan for any family members who plan to take over the business. This training and development strategy will provide future operators with the appropriate skills and knowledge to successfully run the farm.
- Discuss various options in a free-form conversation. You will shrink the list down later.
- Assemble an advisory team (lawyer, accountant, financial planner, banker, etc.) to help you in this process.
- Consider income and estate taxes but don’t focus on them.
- Write it down so you’ll be sure to finish it.
Don’t Do These Things:
- Procrastinate. Instead, start planning now.
- Be afraid to ask questions and avoid listening carefully to the answers. You might not like the answers, but they are important to the process.
- Assume you know what others are thinking. Instead, let them articulate their views.
- Be afraid to share the load. Instead, results likely will be better if you let go and allow others to help.
- Define life or family as the farm. There’s more to life than work on the farm, including family, friends, sports (yes, it is OK to golf!), hobbies, etc.
- Put all of your eggs in one basket. Instead, plan ahead, think early about retirement or succession, and save and invest in off-farm assets so you have options.
- Rely on one adviser. A team can do a better job.