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Why 2020 Should Be the Year You Start Your Transition Plan

01/12/2019


With a new year upon us, you’re a little bit closer to retirement. So, the question is: have you started planning your succession yet?

If not, you may not be worried about it. Afterall, transitioning your family farm is easy, right? You can do absolutely nothing and the farm will still transition. The trouble is, it might not end up in the hands of those you’d want it to — or this strategy could cause an irreparable family rift. And it might get in the way of your dream retirement.

Fortunately, there are alternatives. You could start the planning process early — as in, this year — and create a plan that’s fair, equitable and workable. It can meet the needs of all involved and you can make sure of it, by giving all interested parties enough lead time to look it over and come to a consensus agreement.

The thing is, unlike the “doing nothing” approach, designing a transition plan isn’t easy. There will likely still be some family arguments and not everyone is going to love every decision you make. But there are a few things you can do to streamline the process and take a bit of the edge off.

The key is to focus on preserving something we like to call “relationship capital”. Basically, throughout your transition planning journey, you want to prioritize your family’s relationship with each other — specifically, trust, loyalty, positive attributions, benefit of doubt, goodwill, grace, forgiveness and stewardship.

To do this, your planning process should include:

  • Clear communication. Get your family to sit down and develop its values, vision and mission. These things don’t need to be formalized statements at first, but they should be intrinsically understood by all members. You should also strive to manage expectations of the transition process and create some rules around inclusivity in your farming business.
  • A long lead time. If you want to make the process easier, then you need to start the process as early as possible. This will give you plenty of time to focus on your family’s needs, work through their expectations and give them time to digest new information and decisions. During this phase, it may be helpful to rely on storytelling — or other types of family conversations — that can establish values and create long-lasting bonds.
  • Room to change. If your pending retirement is closer, it’s still possible to make up for lost time and generate relationship capital. Depending on your family, it may require changing certain behaviours — something that can be achieved by creating a family statement, set of protocols or even full constitution. By working to shift behaviours, you can help create the right atmosphere for a smooth transition.

In the end, taking the time to thoroughly plan your transition and emphasize the importance of the process with other family members will not only make your retirement a whole lot easier (and your family gatherings less stressful) but it may even bring your family closer together.

To learn how MNP can help you prepare for your family farm’s inevitable transition, contact an MNP Business Advisor near you.