Don’t put off succession planning

Farmers tend to put succession planning off until “tomorrow.”
Maybe it’s the fear of dealing with the unknown or the fear of being “put out to pasture.” Or perhaps the fear of facing the loss of a business they created.
Two options exist for every farm business owner—either the succession of your farm will be an event controlled and planned by you, or it will be an unplanned occurrence brought on by outside forces.
More harshly, either you implement a succession plan or your farm business is sold.
There are many stumbling blocks to successful family farm succession planning. Alberta Agriculture, Food and Rural Revitalization has come up with a list of eight of the most common myths:
•51 percent ownership in the farm business means control
Perhaps legally, but in practice family consensus vetoes voting control. Spouses, children, and daughters-in-law are seldom ignored.
•Tax and estate considerations are the basis for farm succession planning
Not really. Decisions usually are made on the basis of “soft issues,” like what is fair to all the children or how the next leader will be chosen and trained.
•If I give them ownership, they’ll put me out to pasture
Working out future roles in advance will help ease the owner’s fears of losing their self-worth and having no place to go.
Perhaps the owner can be the CEO who everyone turns to for advice.
•It’s too expensive, or I can do my family’s succession planning without outside help
Okay, so lawyers and accountants charge a lot. If you do it yourself, you have to be up on tax planning, insurance, business valuation, family and property law, investment management, and so on.
That’s why you pay for professionals—they have years of experience and know the best way to structure your farm business to meet your needs.
•My will provides for fair and equal treatment of all my children
Fair and equal is a noble concept because no one wants to say they treated one kid better than the others. However, you have to consider the financial viability of the farm.
Being fair does not necessarily mean being equal
•Everyone know what I want to do with the farm
Communication between (and even within) the generations is critical to a successful succession plan. The plan has to meet the needs of everyone involved in the operation.
•Succession planning is complicated
It doesn’t have to be. A plan that includes succession, family, and business planning usually is based on good old common sense.
It can be completed by the owner who is willing to set personal goals and business priorities.
•I’m immortal
Consider your friends and neighbours who finally faced up to planning responsibilities after an accident, illness, or a heart condition.
Wouldn’t it be more fun and much better to start before any of this happens to you?
For the good of your business and your family, begin planning your succession now.

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