HomeMy WebLinkAboutThe Citizen, 2005-03-17, Page 31PAGE A6. THE CITIZEN, THURSDAY, MARCH 17, £005.
Tough questions have to be asked when planning
Continued from A5
tant io you as you near the end of
your farming career.
Tough questions have to be asked.
Is there a potential successor? If so,
does that person have what it takes
to operate the business in today’s
agricultural economy?
If there is no successor what are
the options? Is selling part or all of
the farm assets an option? How long
does the current operator want to be
involved in running the business?
These are questions that can only
be answered by those who will be
affected.
Coughler has prepared some dos
and don'ts to make succession
planning easier. Do:
• think of succession planning as
a process rather than an event. It
takes time and effort.
• start planning now. The earlier
planning begins, the greater the
number of options.
• keep the big picture in mind
(long-term, strategic direction)
along with a positive attitude. These
can make all the difference
• a financial analysis of the past
and present farm business along
with some financial projections.
Look seriously at profitability. If the
farm is not making money now,
what can be done to make it
profitable? Is the farm business
viable in the long run? Profitability
is the show stopper when it comes to
developing a succession plan.
• become educated about the
subject and become an active
participate in the planning process
• consider using a family meeting
mechanism to open the lines of
communication among family
members. An objective, third-party
facilitator can help ensure that the
initial meetings run well and
everyone has an opportunity to
voice their interests and concerns.
• develop a strategic plan for both
the family and for the business at the
start of the process. This plan
includes a long-term vision of what
you want to happen to the business.
Write it down and plan towards this
vision.
• discuss family and business
goals and objectives as part of the
strategic planning process.
• communicate with family
members about plans, strategies,
issues and problems
• discuss the issue of fair
(equitable) versus equal division of
the farm early in the process —
especially if there are off-farm
family members involved.
• do prepare a legal will early. A
will can provide guidance on how
the estate would be settled.
• develop a successor
development plan for any family
member(s) who is (are) planning to
take over the business. This is a plan
to train and develop the successor(s)
so he/she has the appropriate skills
and knowledge to successfully run
the business.
• continue to generate and
discuss various options — be
creative. These will need to be
narrowed down to just a few ideas
• assemble a team of professional
advisors ( a lawyer, accountant,
financial planner, banker) and work
with them; communicate and ensure
they fully understand what is
wanted.
Once there are some clear ideas of
how the transfer might take place,
the (earn of advisors can assist in
looking at the pros and cons of
certain ideas. The family members
involved will decide upon the best
plan and strategies for their
situation. The advisors can then help
document and fine-tune this plan.
Consider the advice and ideas of
different advisors as the plan
develops. Each advisor will have a
slightly different perspective to
consider. Remember this is the
family’s plan, not the advisors’.
Family members have to buy into
the plan for it to be successful.
Consider the tax implications but
don’t emphasize them as the most
important thing.
Instead the goals should be to
determine and select the best
process to transfer a profitable and
viable farm business while
considering the tax consequences
and preserving as much family
capital as possible.
Don’t:
• procrastinate
• be afraid to ask questions and
listen carefully to the answers even
though you might not like them
• assume you know how others
feel about the process or what they
want to achieve from the succession
plan. Listen carefully and ask
questions if you don’t understand.
SPRING IS JUST AROUND THE CORNER
• be afraid to share
responsibilities. Both generations
will need to work together to ensure
the transfer of labour, management
and assets.
• define one’s life as the business.
There is more to life than work.
• put all your eggs into one
basket. Plan ahead, think early about
retirement, save and invest off-farm
so that you will have some options
in the future
• rely on just one professional
advisor.
What succession ultimately comes
down to is letting go of power and
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control, which can be difficult.
Farm Family Coach Elaine Froese
says, “If you have the foundation of
love, respect and appreciation
within a family, you can then talk
about changing the way decisions
are made, how work styles might be
different and the difference in
management processes. “Things
aren't going to be done the way they
were before, but that’s okay.”
Froese suggests thinking of a farm
transition as an adventure, a process
that everyone needs to go through if
they are going to make it. “The
result is a plan for transition that
makes good sense for everyone
involved. “
“Grab the bull by the horns,
reflect on what you need to talk
about and keep listening to the
needs, wants and hopes for your
farm family.”
For families like the Lintons the
process is ever-evolving, however.
“We have done some planning,
more for immediate need, such as a
tragedy or illness. We have arranged
for power of attorney. But it's a case
of one day at a time,” says Dave.
“Until my kids decide we can’t
take it much further.”
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