Succession Planning FAQs

This webpage has a series of question and answers from the Farm Journal Legacy Project, which is a US based web resources that aims to cultivate multi-generational success in the agricultural community.

The Succession Planning FAQ section involves the following Q&As:

• What is succession and what will it accomplish? Succession is the process of transitioning the family operation to the next generation.
• What’s involved in a succession plan? A good succession plan is far more than a financial or business arrangement. It’s a roadmap for ensuring the continued support, security and growth for you, your family and your operation. It should address financials security, management continuity/ownership transition, leadership development, estate planning.
• What are the benefits of a succession plan? Security, opportunity, clarity, visions, focus, leadership development.
• How do we get started? A family meeting is the perfect starting point for the succession planning process. A simple explanation to family members can get the ball rolling: “We’ll be scheduling a family meeting soon to talk about how each of us would like to be involved in the future of our operation.”
• What’s the difference between a succession plan and an estate plan? Estate planning and succession planning are not the same. Common, off the-shelf, estate planning techniques are designed to mitigate the estate tax. That’s what estate planning is all about. The goal for succession planning is much more comprehensive
• How often should a succession plan be updated?Succession and estate plans are not once-and-done affairs. Maintaining the validity of your plan calls for annual reviews and updates.
• How do we know when it’s time to seriously consider succession planning? Starting the process does not mean you’re giving up, rather it’s the next step in growing a business.
• What if my family can’t see eye-to-eye about our goals? If your family faces communication challenges, here are some key points to consider:1. Clearly define your objectives of the intent of each interaction.2. How do I make the best decisions for active and inactive children? In the succession planning process, the equal versus fair discussion paralyzes most parents. It is possible to find a more equitable solution. In doing so, some specific factors should be taken into consideration when reviewing the involvement of each child in the operation. Those factors are:3. Tenure – While the length of service does not indicate success, it does demonstrate dedication and loyalty to the operation.
  • Try to understand the other person’s point of view.
  • There are numerous options; be open to alternatives.
  • Acknowledge that it takes complementary qualities to build an operation.
  • Know that it is okay to disagree.
  • Performance – Measuring the performance of every employee, including family members, is a key to lasting success, continuing motivation, growing capability and open communication.
  • Professional development – All employees, including family members should be recognized and rewarded for increasing capabilities and growing professional competence.
  • Skills and abilities – A capable person who has demonstrated their abilities should be rewarded for their inherent value to the operation.
• How long does it take to establish an initial plan? The succession planning process can take months and sometimes years.
• Who will be involved in the succession planning process, and why? Only active family members should be included in discussions regarding ownership, transition plans, financial arrangements, etc.  The concerns of inactive family members often cloud the issues and distract attention.
• Why is the continuation of the family operation important? The preservation of the family operation is the foundation on which succession planning is built. If maintaining the future integrity of the operation is not important, an owner can suffice with a retirement plan and a simple estate design.
• How do we select an advisor to guide our planning? A key decision you make following the commitment to engage in the planning process is who should act as your succession planning facilitator. Putting a succession plan together will require professional assistance. If nothing else, you will need a lawyer to prepare the documents, an accountant to crunch the numbers, a financial planner to implement and others along the way.

United States – Farm Journal Legacy Project