Together We Can Make A Difference (Part 2)
[Editor’s Note: This is Part 2 of a two part blog story. Read Part 1 here.]
After meeting with countless agribusiness owners, I’ve found that the reasons for not planning boil down to a few common issues. To start with, succession planning is often confused with estate planning. The goal of succession is to transition a going-concern to a well-prepared next generation. An estate plan is intent on eliminating or at least minimizing the estate tax. Though similar, the two pursuits can often generate opposing results. A person can’t simultaneously divide the farm to eliminate the estate tax and keep it together, to allow the next generation to continue farming.
Secondly, most families rely on their current advisors—CPA, attorney, financial planner, etc.—for help. They hope these trusted professionals can and will facilitate constructive conversations about succession. Yet, due to the complexity of succession planning, most advisors will not engage in the process. To provide real solutions, an advisor must be well-versed in tax matters, legal strategies, financial concepts, and business planning. This reluctance leaves most owners confused and bewildered. They struggle to find assistance and usually give up over time.
Thirdly, until recently there were no constructive tools and comprehensive planning models to facilitate the succession planning needs of agribusiness owners. Many farming operations are built around preserving a lifestyle, rather than generating a return on investment. In the past, leadership training consisted of good parenting and a strong back. The complexity of farming today, requires specialized methods, continuance improvement, and a deep understanding of business finance.
Finally, a reluctance to address the difficult issues in succession (equitable distributions, family members not active in the operation, and in-laws) poses major stumbling blocks for most family business owners. But, a properly designed plan creates a better outcome for the family, the business, and next-gen leaders. The primary purpose of succession planning is to promote, preserve, and protect the family’s most valuable asset.
A succession plan is far more than a binder full of legal documents and a life insurance policy. It’s founded on common goals and shared dreams. It ensures a family’s financial security and the operation’s capital resources. Planning for multigenerational success is a big step on the road to long-term success. Done right, it’ll be a rewarding experience for the owner, the family, and the farm.
This is where I can help; together we can make a difference. We can share experiences and create an outreach to promote the success of the family operation. Doing so, will:
– Increase our reach to the rural community.
– Promote family operations as a healthy food source.
– Demonstrate stewardship as a foundation of our Faith.
Are you interested? What kind of information may be most helpful to you? Please let me know if you’d like more information, articles, blog posts, and webinars regarding any of the succession planning topics for business owners listed here:
- Conversation starters
- Tax avoidance strategies
- Financial planning
- Estate planning techniques
- Business management for transition
- Asset protection and control
- Family issues:
- Special needs
- Child or Parent dependent care
- Contingency planning
- In-laws & divorce
- Alcohol or drug use
- Equitable distributions to children
- Retirement planning
- Charitable giving
- Other: ___________
— Kevin Spafford, CERTIFIED FINANCIAL PLANNER™, specializes in succession planning for farming professionals and family business owners. His firm, Legacy by Design, LLC has offices in Yuba City, CA and Spokane, WA. He is also a member of Catholic Rural Life. Kevin can be reached at (530) 671-2100 or email@example.com