Farm Progress

In a transition planning process, we need the successor generation to acknowledge additional risk.

Rich Dunn 1, Blogger

January 5, 2016

2 Min Read

We talk about all kinds of risks in production agriculture. One could say that most everything a producer does is involved with managing risk of one kind or the other. In a transition planning process we need the successor generation to acknowledge additional risk.

In my upcoming session at the Farm Futures Business Summit 2016 in Saint Louis in January, we will touch on five things you need to start farm succession planning: Lifetime income, successor preparation, managed health risk, managed successor's risk, and fairness to heirs.

The fourth is to understand and manage the risks of the successor generation.

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As the successor generation assumes control of the operation, they need to consider a couple categories of risk that could stop the transition process cold.

1. What happens to the game plan if the primary operator becomes injured and can't work? A long-term disability strategy can provide funds to keep the business alive while the successor owner regains health and returns to work. Or it can help create time to identify a new successor to replace the disabled party.

2. What documents are in place to allow decisions to be made in the event of the incapacity of the successor manager? Whether is temporary or permanent incapacity, proper documents allows others in the operation to make needed decisions and take action while the successor manager is out of the picture.

3. What happens if the successor owner, or her spouse, dies prematurely? Do they have a solid buy-sell agreement to provide for successor ownership? How much additional living expenses will the family have as a single-parent household?

At the Summit we will talk about all of this and leave plenty of time to answer your questions. I sure hope you can join us.

If this blog has got you thinking about your own situation, get in touch with my office ([email protected]).

Investing in a knowledgeable advisor and thinking about answers to key questions before putting pen to paper can make creating a farm estate plan much less complicated. Use the Penton Agriculture free report, Farm succession planning: Customizing a farm estate plan to get started on your own plan.

The opinions of Rich Dunn are not necessarily those of Farm Futures or the Penton Farm Progress Group.

Important information

About the Author(s)

Rich Dunn 1

Blogger

Rich Dunn is co-owner of Dunncreek advisors, a fee-only Minnesota-based financial planning firm focused on preserving and managing wealth. A veteran financial planner, Rich’s experience is informed by a lifetime in the agricultural industry and a 15-year career working with food and agriculture businesses and farmers. He grew up on an Illinois farm and earned a bachelor's degree in Ag Education and Ag Communications at University of Illinois. Because Rich is a fee-only, independent advisor, he strives to place clients’ interests ahead of his own. Farms in Transition is written to help you with your farm estate plan. Contact Rich at [email protected]. Information about Rich’s business practices is found here: www.dunncreekadvisors.com.

Advisory services offered through AdvisorNet Wealth Management Inc. an SEC registered investment advisor, 701 Fourth Avenue South, Suite 1500, Minneapolis, MN 55415, (612) 347-8600, [email protected].  AdvisorNet Wealth Management Inc. and Dunncreek Advisors are separate entities. These articles are for informational purposes only. While designed to provide accurate information on the subjects covered, they are not intended to provide specific legal, tax, or other professional advice. For a comprehensive review or specific personal assistance, always consult with an appropriate professional. Dunncreek Advisors does not provide legal or tax advice.

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