Why is Succession Planning so important?
- By starting early, parents can eliminate a lot of heartache and conflict due to the perception of fairness.
- Huge tax implications can be encountered due to improper planning.
- If preserving the family farm is part of the “family heritage” planning how the ownership of the farm moves to the Next Generation is vital.
- Retirement for the parents and the entry of the Next Generation into farming can be a seamless and stress-free process through proper and meticulous planning.
The Five Step Recipe to Start the Succession Process
- Mother and father need to put together a “lifestyle budget” to give them am idea how much their retirement will cost.
- Engage your accountant to determine if the business has the potential to generate enough profit for another additional family.
- Does the younger generation have a dream big enough to pull them out a bed every day until their debt is paid?
- Is it possible to put together a financial deal that will meet the needs of mother and father, and still allow the younger generation to see light at the end of the tunnel?
- The final step involves creating a system that will insure open and honest communication takes place among all family members.
Most families who run into problems do so because of inaction. They are either too afraid to ask for help, or they fear making the wrong decisions.
The most difficult part of bringing of the younger generation into the farming operation is to sort through the “human relationship” issues.
Farm families who do this successfully, spend time talking with each other either in family meetings or informal discussions or both to find out what each person is dreaming about for their individual future.
Once everyone understands where each family member is “at”, putting together a plan to make it all happen is much easier.