You Don’t Have to Go It Alone – Using Advisors in Your Farm Transition
I was part of a panel discussion on “Utilizing Advisors in Farm Transition” this week at the Idaho Department of Agriculture Farm and Ranch Conference in Boise, Idaho. While it may not be the most glamorous topic, it is a vital one. None of us possesses all the knowledge and training needed to achieve all the objectives of transition. Therefore, a team approach is almost always the best approach. The first task is determining who should be on your team of advisors. As business author Jim Collins said, you have to get the right people on the bus and get them in the right seats. Your existing advisors should almost always be part of the team, but they may need to be supplemented with people who have more specialized knowledge.
Starting with the attorney, it is important to understand that you may need more than one. The estate planning attorney is usually a necessity because an estate plan is almost always part of the plan. But depending on the nature of the plan an attorney who handles complex business matters or retirement plans may also be important. Another necessity will be an accountant. Not just a tax preparer, but a tax planner. Again, it may require more than one person. There may be needs related to income taxes, but also estate and gift taxes. Accountants that work with one don’t always feel comfortable with the other. Another key member of your team will be your investment advisor. Someone who can help you assess your needs into retirement and the best way to achieve those goals. Preferably this person will also have expertise in life insurance and the many ways it can be paid for. If not, life insurance is an important tool, and your team should have someone with a solid skill set in this area. Your banker should also be part of the team. If you have debt, as most farms do, any plan developed will need approval at some level from your bank. Involve your banker with your planning team to avoid unexpected surprises. Your local extension office can also be a great member of the team. They may have variety of resources that can help you get to a place where your work with the other advisors can be much more productive.
These advisors can help you involve other necessary professionals such as appraisers and valuation experts that may be necessary as part of the planning and implementation process. These impartial observers will help guide you through the process of identifying your objectives and showing you how to achieve them. They can provide a level of objectivity that will be hard for you and your family to bring to the process. You should insist that they work together and communicate regularly. Few things are worse in an advisory team than a member of the “team” that won’t participate with the planning process. Especially if that person later tries to derail implementation or worse waits until after implementation to raise concerns about why things won’t work. Unfortunately, we all know people who operate this way. This should never be acceptable to you as the business owner. Just as it is important for your family to communicate, it is important for your advisory team to communicate with each other and with you.
The last thing about the team is this, every good team needs a leader. This leader may be you, it may be a member of the team of advisors, or it may be a separate transition coordinator who facilitates the interactions of the team. It is important to establish early on who will be the person coordinating and moving the process forward.
Whether you refer to it as exit planning, transition planning, or succession planning, it can seem overwhelming. But with a good team that is well coordinated, you can set achievable goals and objectives to transition your farm or ranch to the next generation and then bring them to reality. Go Team!
This post is for informational purposes only and not for the purpose of providing legal advice. You should contact an attorney to obtain advice with respect to any particular issue or problem. Nothing herein creates an attorney-client relationship between Hallock & Hallock and the reader.