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Four steps to transitioning your farm while leaving a lasting legacy

September 29, 2021

Four steps to transitioning your farm while leaving a lasting legacy

Synopsis
5 Minute Read

Transitioning the family farm involves a four-step process that is critical to a fair, balanced, farm transition and stronger relationships within the family and business.

Partner and Business Advisor

When it comes to transitioning your farm to the next generation, there’s a lot to think about. Your agricultural operation might be worth a lot, but for many families, creating a legacy and keeping the farm in the family is worth much more than money could ever provide. But how do you go about it in a way that’s fair to all family members and will ensure the outcome is successful? At MNP, we’ve learned that following a four-step process is absolutely critical to a fair, balanced, farm transition and stronger relationships within the family and business.

Many companies offer transition planning for agricultural families. They’ll help you implement a transition plan and estate plan, as well as tax strategies and other things you may or may not need. These are the services required when it’s time to implement. But we’ve found that implementation doesn’t work without a full understanding of your family, your operation and your unique goals.

Discovery process

That’s why discovery is the first step in our TransitionSMART™ process — a succession planning process developed specifically for the agricultural community. Every family is different, with different dynamics and their own unique situation. The discovery phase allows us to get to know the people involved in your farming operation as well as family members who aren’t involved in the business but who may have expectations or desires you need to be aware of before taking action.

Discovery is a time-consuming process as we sit down with each stakeholder for an individual one-on-one discussion. But it’s extremely valuable. These conversations allow everyone to say what needs to be said — and we often uncover details that wouldn’t have come to light otherwise.

For example, we may learn that an adult child working on the farm is doing it out of a sense of obligation rather than out of a love for farming. Individual families may be having issues that they aren’t sharing with the broader family group because they don’t want to worry anyone. There may be a family member who wants to have a piece of property from a lifestyle perspective rather than a business perspective. The issues that come up because of these discussions are generally not talked about because they’re not comfortable conversations, yet they’re important to know if you want to have a successful transition.

As part of discovery, we’ll ask family members for their thoughts with respect to an estate plan and their vision as to what would be fair or equitable. We also gather information such as wills, financial statements, life insurance information and details about who owns the corporate shares or individual farm assets. Additionally, we prepare a net worth statement to determine how healthy the business is from a financial perspective.

Clarification of goals and objectives

Once we have all the information, we enter step two: clarification of your goals and objectives. In this phase, we talk about retirement income needs, estate planning decisions that must be made, legal agreements that have to be put in place, and how we’re going to coach people through challenging conversations. We also look at the timeframe you have for transitioning your business.

Planning and implementation

The next step is planning. Once the plan has been developed and presented to the family, it can be tweaked so that it’s setting you up for success. Only then do we move to implementation. This ensures that the plan will work rather than having to be revamped in the near future, which can be costly—both in terms of money and to family relationships.

What sets MNP apart from other companies is our people. We take a holistic approach to transition planning and get to know our clients. We also have a large group of people who specialize in agriculture and understand the values of farmers. When you have empathetic people with the right mindset and skill sets who work to build trust, it leads to a more positive outcome.

Contact

For more information on succession services, contact Larry Batte [email protected] or 226.775.3032.

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