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Last minute planning does not lead to a successful farm succession. Transition planning must be approached as a structured, ongoing process that will likely span five to eight years from start to completion.
Transitioning the family farm is one of the most important decisions a farm business owner will ever face. Most farm owners spend years working hard in their farm businesses to provide a livelihood as well as a rural lifestyle for their families and children.
The legacies that parents want to leave their children as they commence succession planning are typically to ensure the successful continuity of their farming operation, future financial security and farm lifestyles for their families and continued harmonious relationships among all family members.
The process of succession planning is not an easy one, and just as every family is unique, succession plans have to be tailored to be appropriate to the requirements and dynamics of a particular family. Succession planning is often left unattended as farmers try to grapple with where to start on the seemingly overwhelming process. Alternately, pieces of the succession plan are completed, but the overall plan is never finalized or linked together to ensure the transition will be complete, well-managed and financially sound. This can result in inconsistencies or serious omissions in the overall plan.
All this takes years and in many cases, the better part of a decade. The retiring generation should really start the process years before they want to retire to ensure the plans and structures are in place to transfer not only ownership of the farm business but also farm management and labour to the next generation.
The major considerations that have to be address in a sound transition plan are:
Addressing these key areas requires a series of interviews and meetings with family members where we gather information about goals, business wellness and financial performance. This initial data is then analyzed and forms the basis for additional family meetings to determine the future direction of the farm and the transition to the next generation. The meetings will discuss successors, labour and management, profitability, ownership and tax structures and retirement plans.
After initial interviews and meetings, we then develop implementation timetables within each of the key areas, which provide the framework for all the critical steps to implement the transition, such as individuals responsible and completion dates.
For example, an ownership transfer plan is one of the requirements and address such details as:
Other encompassing plans would address key areas such as farm business, retirement and communication. A sound, process-oriented approach to transition planning is required to ensure all considerations and issues are identified and addressed appropriately. This planning is necessary to ensure the continuity of your farm operation and the security of your family’s future.
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