‘Succession planning’ generally refers to the arrangements for a successor’s future management of the business, while ‘estate planning’ or ‘inheritance’ relate to the legal transfer of farm assets. Often both are discussed together, which can be daunting. Here is some advice to get started.
Getting into details
Advice and template succession plans are available online (see links below), however there is no set format.
- Clearly identify all assets (& debts) to be passed on and estimated value (i.e. an up-to-date balance sheet)
- Gather all supporting information (e.g. title deeds, rental agreements, mortgage details, financial accounts, life insurance policies, etc.)
- Assess options for transferring ownership (purchase, rent, gift), current/future business structure, and farming/ diversification opportunities
- Agree everyone’s current and future roles and responsibilities
- Set a succession timeframe
- Consider tax implications, but don’t be driven by them (seek professional advice)
- Discuss “what if” scenarios, e.g. “four Ds” - death, divorce, disagreement, disability
- Ensure all parties have a copy of the plan
- Regularly review plans as circumstances change (e.g. marital status, family size, valuations, land area, income).