Select the Right Adviser

July 6, 2011 06:27 AM

If the current uproar over the estate tax serves no other purpose, maybe it’ll encourage you to re-evaluate your succession plan. From time to time, we all need a wake-up call, and maybe this is it. A comprehensive succession plan always includes strategies to mitigate the estate tax and minimize transfer obligations. But even the best estate plan may not address succession concerns.

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Recently, I had the privilege of meeting (via e-mail and follow-up conversations on the phone) an estate planning attorney who works out of Dayton, Ohio. Tom O’Diam is well versed in succession planning, the rigors of estate planning and the complementary nature of both disciplines.

Tom wrote: "The goal of every estate plan should be to maintain control of everything while you are alive and well; to provide protection for you and your family if you become incompetent; upon your death, to give what you have to whom you want, when you want, in the way you want; and to accomplish all of the above at the lowest possible overall cost."

He went on to say: "I understand the differences between succession planning and estate planning, as well as the importance of both. As with any family business, farmers who address one without the other suffer from incomplete planning. It is important for professional advisers to have extensive experience in business succession and estate planning in order to give the farm family the best possible advice and service."

Team roster. A key decision following your commitment to engage in the succession planning process is deciding who will help the family facilitate a plan. Not only must they know succession planning and have experience in the field, they should also understand the ins and outs of working in a family environment.

Designing and implementing a succession plan requires professional assistance. At a minimum, your advisory team should include an attorney to prepare documents, an accountant to crunch numbers and a financial planner to carry out the business strategies.

For best results, one of these professionals should also serve as leader of the project. Though any one of them might be capable, they will not all be equally qualified. The wrong choice can lead to frustration and failure. But the right person can inspire the family to enjoy the journey and grow in the process.

When appointing or hiring a project manager, remember that he or she will serve as coach and confidant to multiple generations of your family. His or her communication style must create an environment for success and encourage all of the active family members to get involved and stay interested in reaching a satisfactory outcome.

Evaluate candidates carefully. Your project leader should have a proven ability to:

  • guide a multidisciplinary team of professionals to help the family achieve its objectives.
  • facilitate family meetings, lead discussions and conduct interviews with owners, management, family members and other professionals.
  • delegate responsibility and follow up to ensure that the assigned tasks are completed in a reasonable time frame.
  • coordinate the process, including communication, planning and implementation, to avoid any possible roadblocks.
  • keep the family informed of financial and legal developments, revising the plan in accordance with current tax law, business environment and family dynamics.

Tom concludes: "Uncertainty is a fact of farm life. However, it does not have to be that way regarding the family’s estate plan. Work with a team of professionals who understand the unique circumstances that farm families face and who are familiar with planning techniques that work best with farms. Most importantly, take a proactive approach and plan early but build in flexibility to allow for change. Leaving things to chance will likely assure failure."

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