Presentation on theme: "Farm Business Succession Planning John R. Baker Attorney at Law Beginning Farmer Center 1.877.232.1999 Photos by USDA NRCS."— Presentation transcript:
Farm Business Succession Planning John R. Baker Attorney at Law Beginning Farmer Center email@example.com 1.877.232.1999 Photos by USDA NRCS
Acknowledgments Andrew Errington – University of Plymouth, UK Walter Warrick – Prof. of Bus. Mgt, Drake University (retired) Don Hofstrand – Farm Management Field Specialist (retired) Beth Fleming – Family Resource Management Specialist (retired) Phil Hufferd – Farm Management Field Specialist (retired) Mike Duffy – Professor of Agricultural Economics Margaret Van Ginkel – Family Resource Management Specialist Kelvin Leibold – Farm Management Field Specialist James Jensen – Farm Management Field Specialist Andy Larson – Extension Program Specialist Dave Goeller – Farm Transition Specialist, University of Nebraska Kiley Mars – Owner, InSightOut, LLC
Don't be afraid to ask dumb questions. They're more easily handled than dumb mistakes. William Wister Haines
A Critical Difference How we define “family”, the priorities, expectations, relationships, and measures of success in a family are, and should, be different than the priorities, expectations, relationships and measures of success in a family owned business.
Identify Which System It is imperative that you identify and operate in the system that is appropriate in a given situation. It is appropriate to behave as a family at a holiday. It is not appropriate to behave as a family at a business meeting.
“Entry into farming is a process, not an event.” Dr. Paul Lasley
What to do with the Farm/Ranch? The essential question that must answered: Do you want to transfer the ranch/farm as a “viable business” or simply as a “group of assets”?
THE FARM Money Management SUCCESSION PLAN BUSINESS SUCCESSOR HEIRS Owner’s priority Continuation of family ownership of farmland Owner’s priority Continuation of farm family business Assets ESTATE PLAN
Business Succession Planning Here What is here? Why is it here? Who is here? Why are they here? What are they doing? Why are they doing it? How is it being done? How well is it being done? Profitable? Increasing wealth? Here and Now There and Then When is “then”? Where is “there”? There What is there? Why is it there? Who is there? Why are they there? What are they doing? Why are they doing it? How is it being done? How well is it being done? Profitable? Increasing wealth?
Farm Business Succession Planning Here and Now There and Then When is “then”? Where is “there”? Now What is happening: In our lives? In our families? In our industry? On our farm? Then What is happening: In our lives? In our families? In our industry? On our farm?
Why don’t we Plan? Too Complicated Don’t like to Plan Facing our own Mortality
Small problems are hard to diagnose and easy to solve. Nicolo Machiavelli The Prince, Book IV Big problems are easy to diagnose and hard to solve.
When is it not necessary to develop a farm business succession plan? When you do not care what happens to the farm family business. When you do not care if your heirs own and operate the farm family business. When you can afford to lose money or assets or managerial control. When you do not care what happens to your spouse.
ANSWER THE DIFFICULT QUESTIONS Do the owners desire to continue family ownership? Can the family withstand the stress of succession planning? Can the family withstand the stress of not planning? Is there a successor capable of managing the business? Does the successor want to manage the family business? Will the owners recognize the authority of the successor?
Will the owners transfer management to the successor? Will the owners develop a business succession plan? Are all interested parties identified, informed and involved? Is there a mutually agreed upon decision-making process? Is there a compatible vision for the future of the business? Have the roles that need to be filled been identified?
Have successors been chosen for key positions? Have training plans been developed for those positions? Is there an estate plan with equitable division of property? Have contingency plans been developed?
IF YOU WANT YOUR BUSINESS TO CONTINUE BEYOND YOUR LIFETIME –You must create a business succession plan. –Planning takes place when the seat of the pants meets the seat of the chair.
–Planning is not does not create certainty. –Making a PLAN will improve your chances for a succession. –To be effective plans must be shared.
Planning is deciding How long the will the transition last What management decisions are delegated to the successor Which assets are transferred and when When does the owner retire What retirement means What is the source or retirement income
–Implementation requires: Hiring professional advisors Paying for professional advice Reviewing documents Signing documents Transferring ownership of asset Transferring management Planning includes implementing the plan
Presented by: John R. Baker Attorney at Law firstname.lastname@example.org 1-800-447-1985 Beginning Farmer Center www.extension.iastate.edu/bfc/ 877.BFC.1999