Farm Succession - Do's
Table of Contents
- Other Resources
Farm succession planning is a process that should be started
sooner than later.
Tough questions have to be asked. Is there a potential successor?
If yes, does he or she have the skills, abilities, knowledge and
desire to successfully operate a sophisticated farm business in
todays agricultural economy? If there is no successor, what
are the options? Is selling part or all of the farm assets an
option? How long does the current operator(s) want to continue
running the business? Only the individual(s) involved can answer
Here are some dos and donTs to help start the process.
Do think of succession planning as a process rather than
an event. It takes time and effort.
Do start planning now. The earlier planning begins, the greater
the number of options.
Do keep the big picture the long-term direction of
the farm business in mind. Maintaining a positive attitude
can make all the difference.
Do complete a financial analysis of the past and present
farm business along with some financial projections. Profitability
is a key piece of the puzzle the show stopper
when it comes to developing a succession plan. If the farm is
not making money now, what can be done to make it profitable?
Is the farm business viable in the long run?
Do become educated about the subject take workshops
and seminars, read articles, complete self-assessment questionnaires
related to succession; become an active participant in the planning
Do consider using a family business meeting as
a way to open the lines of communication among family members.
An objective, third-party facilitator can help ensure that the
initial meetings run smoothly and everyone has an opportunity
to voice their interests and concerns.
Do determine the most important things (values and their
priorities) to each individual family member as a starting point.
The business meeting mentioned above can be helpful with this.
Do figure out each individuals personal, family and
business goals, which should be based upon their values and
Do ensure good communication among family members about plans,
strategies and issues.
Do address the issue of fair (equitable) vs. equal division
of the farm early in the process especially if there
are off-farm family members involved.
Do prepare a legal will early. A will can provide guidance
on how the estate should be settled.
Do develop a successor development plan for any
family member(s) who is (are) planning to take over the business.
This is a plan to train and develop the successor(s), so he/she
has the appropriate skills and knowledge to successfully run
Do generate and discuss various options be creative.
These can be narrowed down over time.
- Do assemble a team of professional advisors (e.g., a
lawyer, accountant, financial planner, banker, etc.) and work
with them; communicate with them and ensure they fully understand
what is wanted. Once there are some clear ideas of how the transfer
might take place, the team of advisors can assist in looking at
the pros and cons of certain ideas. The family members involved
will decide upon the best plan and strategies for their situation.
- Do take responsibility for development and implementation of
the plan with help from the advisors. But remember, this is the
familys plan, not the advisors. Family members have
to buy into the plan for it to be successful.
- Do consider the tax implications, but dont focus solely
on them as the most important thing. For example, rather than
saying, We don't want to pay any taxes, make your
goal, Transfer the farm business efficiently and effectively
while considering the tax consequences and preserving as much
family capital as possible.
- Do write it down. By writing it down, all family members see
exactly how the plan will unfold, which can help avoid future
The advisors can help document and fine-tune the plan. Basically,
the plan is the record of the decisions you make about how the
transfer of labour, management and ownership will be handled.
It describes how best to achieve what family members want to have
happen to the farm business. It must be internally consistent
and address the goals and plans for the family members and for
Dont procrastinate start talking and planning
for succession now.
Dont be afraid to ask questions and listen carefully
to the answers, even though you might not like them.
Dont assume you know what others are thinking or how
they feel about the process or what they want to achieve from
the succession plan. Listen carefully and ask questions if you
Dont be afraid to share responsibilities. Both generations
will need to work together to ensure the optimum transfer of
labour, management and ownership. The successor development
plan mentioned above can help.
Dont define life as the business. There is more to
life than work family, friends, leisure enjoyment, sports,
Dont put all your eggs in one basket. Plan ahead, think
early about retirement, save and invest off-farm, so you will
have some options in the future.
Dont rely on just one professional advisor it
is a good idea to use a team approach.
Other publications on succession planning:
Publication 70, Farm Succession Planning Guide: A more
detailed discussion, with informative technical resources,
designed to give the farm family and farm business advisors
the tools to develop a workable succession plan.
This publication is intended as general information and not as
specific advice concerning individual situations. Although it outlines
some of the considerations around farm succession planning, it should
not be considered as either an interpretation or complete coverage
of the various issues and/or laws affecting farm succession planning.
The Government of Ontario assumes no responsibility towards persons
using it as such.
For more information:
Toll Free: 1-877-424-1300