Sucession planning

[CowgirlJamie]

Hey all! I am new to Agrillve.

A little bit about myself, my husband and I ranch in B.C. 500 cow-calf (Herford cattle) and we are looking into farm succession planning and we are really struggling to find a good approach that works for everyone in our family. We have three kids who are interested in being a part of the operation, but right now it would only sustain about two families. Has anyone been through the succession experience? Any advice would be great!

[Mufferaw]

Find someone with a ag background preferably beef that can walk your family through the exercise of succession planning. It creates those hard discussions today but in the long run you are further ahead. I can only speak to the case where little or no thought was put into succession planning. Speaking from experience it's an absolute disaster when it's left to "the kids can work it out"

[wlc]

Hi there . For good advise contact
Allison Guichon @ Quilchena 250/378/9734
She is an educator with Holistic Management Internatiol & has learned about family planning

[kato]

A good farm experienced accountant can help a lot too. There are ways to do it that work best for everyone, and the tax consequences of a wrong move can be painful.

[grassfarmer]

Succession planning or family planning?, lol there is a difference!

[CowgirlJamie]

Thanks for the advice!
I might try and reach out to Allison. My husband is a bit uneasy about bringing in a third party, as he views it as a family matter. But as you all know farming is complicated because it is both a farming matter and a business.

Grassfarmer – my question was about succession planning trying to come up with a five to eight year plan for our kids to take over the family farm.

[kato]

There are so many ways to do it that sometimes a third party can see things you don't.. You don't have to do anything you don't want to, and you can always get second or even third opinions. I would still recommend running everything by your accountant though. I work for accountants during tax season, and have seen a few scenarios that didn't turn out like they were planned.

[smcgrath76]

I would also suggest reading some of the stuff from Elaine Froese. She brings a good perspective on the family side. If your kids aren't married yet, be aware that marriage and kids change a lot of things from their perspective.
We have used third parties here including John Reid through the CAPP program (I think that was what it was called), our accountant, lawyers, etc.
The transition can be complex if you want to avoid as much tax as you can while everyone realizes the realities of business.
Our plan here was to expand, rather than buy out mom and dad directly and use the extra cash flow to help fund retirement (like a dividend). I also have other siblings that are not involved. One farms and used some of our equity at home to launch his operation, others will get life insurance on my parents passing, etc.
We actually formed a partnership prior to making any moves, as it gives you some flexibility if you wish to move to a family farming corp.
Lots of options, and it is a family issue but I have never met a family that has all the resources within the family to figure it out.

[Bez]

Well, one of the things we did was buy a couple million dollars worth of life insurance.

It also now provides us with some tax free income if we draw off of it. A bit daunting at first as the price was pretty high - however the policy has grown by about 35% and whoever gets the place does not get the money - or if valuations change only gets a part of the cash.

Only two more years to pay on it and it becomes self sustaining and continues to grow.

Lots of ways to do things, and this is only one facet of our plan, but the money when we are dead will make the "grief" less painfull. LOL

It will also pay off the non-farming kids and any expenses to the place that might be there when the last of us finally kicks off. That tax free bulk money will fill a large portion of the void and perhaps keep the in-fighting to a minimum.

One final thing - no matter what you do - be sure to be open about it - no surprises means everybody knows what is happening from day one. Far too many keep it all a secret and we all know someone who has been in a serious family fight over the land.

We review ours on an annual basis - with all players at the table - it keeps the potential mess to a minimum.

Best to all

[Beef4lifeguy]

After reading this thread it has become clear that this topic is not black and white…lots of things to consider that’s for sure. I would like to build on Bez point about no surprises – this is HUGE. My parents had told me one thing and then once they passed, it was another thing in the will. It made the grief process that much harder.
I never even considered the life insurance.

Bez did you guys do this long ago? If you don’t mind me asking… who long have you been paying it off?