Team approach can make succession planning easier

Succession planning focuses not only on the current circumstances of the farm, but the future of the farm and the goals of both the current and future generation of farmers. | Getty Images

Just like no farm is exactly the same, it is unlikely that each farm’s succession plan will be the same.

Succession planning focuses not only on the current circumstances of the farm, but the future of the farm and the goals of both the current and future generation of farmers.

Succession planning varies from estate planning in that often estate planning focuses on what happens upon the death of the farmer. Succession planning can occur at various points in time, such as when a new generation is joining the farm, or maybe the farmer is looking to retire and transition the farm.

Depending on the unique circumstances of the farm and the ultimate goals, a variety of professional advisers may offer advice on a successful succession plan. Because of the variety of issues that may arise in succession planning (which are not just limited to estate planning or tax implications), one professional adviser is unlikely to be able to provide advice on all aspects of the plan.

Advisers who may contribute to succession planning include accountants, financial advisers, insurance advisers, lawyers/mediators, bookkeepers, internal managers and counsellors.

Each of the key players in the farm may have different advisers. Therefore, some plans may require further co-operation between advisers in the same field.

When discussing your succession plan, putting together a team of advisers and ensuring they are working in harmony can increase the chances of the plan being successful.

To start the planning process, it is important to identify a lead adviser to flush out the goals of the plan. If multiple parties are involved, the goals might be different.

For example, at the early stages of planning, there could be conflict between generations as to how the farm can be managed going forward. Or maybe the farm involves a partnership and one partner wishes to put a succession plan in place, but the other is not ready to take those steps. If so, the use of a mediator, or other interest-based professional, can help.

That said, while a mediator’s skill set can help with dialogue and interest exploration, some of the goals or ideas must be tested from a legal or accounting perspective. Throughout the process, your lawyer or accountant can work as part of a team to provide expertise to test the options being explored. Having those professionals involved throughout the process can minimize the risk that a resolution is reached, but then the implementation is impractical or produces undesired results from a legal or accounting perspective.

Similarly, in most farms a vital part of succession planning is ensuring the departing farmer has financial security to provide them the standard of living they deserve and want.

To develop a retirement budget or a financial forecast, the expertise of a financial planner may be vital. That financial planner or adviser can work with you to determine your retirement goals and then that information can be turned back to the other advisers to develop a plan that ensures those financial goals are met.

While it may seem daunting to have multiple professionals at the table at once, a strong succession planning team can work to your benefit to ensure the proper expertise is available. It is not to your benefit to develop an entire plan only to have the plan fall apart later, for a reason that could have been identified earlier.

For example, a succession plan could fail if there are not adequate provisions in place for cash flow within the farm or financial security for the departing farmers involved.

Plans can also fail when there is a miscommunication between the parties or no one has identified that various players have varying goals from the start.

Bringing the advisers together at the early stages of succession planning provides an opportunity to develop a game plan and ensures all advisers are working toward the common team goal: developing a successful farm succession plan for you.

Kimberly Visram is a lawyer, mediator and partner with Stevenson Hood Thornton Beaubier LLP in Saskatoon. She can be c ontacted at kvisram@shtb-law.com. This article is provided for general informational purposes only and does not constitute legal or other professional advice and does not replace independent legal or tax advice.

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