Steinman financial network 7 steps to farm succession planning


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Steinman financial network 7 steps to farm succession planning

  1. 1. Serving over 130 farmingfamilies and their businesses. 519.339.6885 The 7 Steps to Farm Succession Planning
  2. 2. The 7 Steps toFarm Succession Planning Steve Steinman, CFP CLU CH.F.C. CAFA President , Steinman Financial Network
  3. 3. Statistics show that the lack of planning on the partof farmers is ALARMING.A survey by Successful Farming found that only 30%of farmers actually have an estate plan.
  4. 4. Too many times these decisions are madeunder time pressure (i.e. we have to dosomething now) or under emotional stress(i.e. just after the death of a parent).
  5. 5. Get everyone to put their real expectations on the table so you have a solid basis for negotiating the future.When people form relationships, there are at least three levels of expectationsinvolved:• those that we know we have and talk about (e.g. that we want to continue to work and live on the family farm).• those we know we have but haven’t discussed (e.g. that we want to inherit the family farm).• some we don’t even know we have - until they are not met (e.g. that we will be able to live on the family farm until we die).
  6. 6. What happens if?Many different unexpected scenarios can happen. Without aplan, the outcome is anyone’s guess.1. What if none of the farm children want to take over the farm?1. What if mom outlives dad? How will she choose to manage the business?2. Rent out the farm? Sell the farm?3. What if mom remarries after dad dies?4. What if mom owns the farm and mom dies before dad?
  7. 7. Farm Succession Planning is not a one-time event, it is along-term strategic process that involves executing the planand re-adjusting based on the changing family situation(new family members/ members that pass on) and theeconomic market.Letting your family know that this is a long-term processthat will benefit everyone involved and getting theircommitment early on to participate to the end is animportant preliminary step.
  8. 8. Many don’t recognize that a lot of communication is inwhat’s not said - silence may not mean agreement, butjust the opposite.Real farm succession planning issues are not financial, not taxes, theyare not business related at all in fact.They are based on your ability or inability to talk with your familymembers honestly. If you can talk out theissues, concerns, dreams, and assumptions with each and everyperson affected by the decisions you will ultimately make – you willhave the basis foryour farm succession plan.
  9. 9. Farming Children versus Non-Farming ChildrenAre the parents willing to treat all of their childrenfairly and equitably in their estate plan?How will this be carried out?When will this be carried out?As the children were being raised, some children worked harderthan others and may have actually contributed more to the parents’farming operation and their estate.
  10. 10. Spouses of ChildrenAre the in-laws considered or even treated as “family” in the“family” business? Do in-laws involved in the family business have asay? Are there pre-nuptial agreements in place?Favourite ChildrenThis is a rather delicate issue to discuss within the family (especiallywith parents) because often times Mom and/or Dad have alreadyidentified “certain favorites” among their children.
  11. 11. This process will require much thought, many hours of discussionby the parents and children, and even seeking out the needed helpof a professional consultant.It is the responsibility of the parents to initiate this estateplanning process. Mom and Dad have to take action andget this process started now.
  12. 12. • Facilitate dialogue & communication with family members and identify their goals, needs and aspirations.• Retire comfortably with guaranteed funds for your retirement.• Your farm to be passed on from one generation to the next in the manner you choose.• Have money available for the transaction at all times to avoid delayed settlement.• Have every member of your family taken care of.
  13. 13. • Eliminate the need for borrowing from the bank for the process of farm succession.• Have all transactions carried out in a tax neutral way.• All family members know what is happening, who is to inherit what, when, and the process to achieve it all.• Have agreements that outline the future and are signed off by all parties.• To have a flexible farm succession plan that can be changed as your personal circumstances invariably do.
  14. 14. • How the farm owners will retire from the farm with guaranteed funds for their retirement.• How and to whom the farm will be passed on from one generation to the next.• How funds will be made available for transactions.• How every member family will be taken care of.• How financial decisions about the farm will be made.
  15. 15. Our goal at Steinman Financial NetworkAfter you have workedwith SteinmanFinancial, that all yourfamily can happily sittogether at ChristmasDinner and feel goodabout the FARMSUCCESSION PLANNINGthey have completed withour firm.
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