Your Legacy To-Do List

July 1, 2010 05:40 AM

The succession planning journey is unique for every family, and each situation brings its own set of challenges. Using a comprehensive planning model and a proven planning process can ensure that the needs of the owner, the family and the farm are fully addressed.

The Farm Journal Legacy Project includes several tools to help you and your family start the process. Before you tackle your to-do list, visit and reference "Conversation Starters," "Goals Clarification Worksheet" and "Selecting an Adviser" under Legacy Tools/Business Continuity.

Use the checklist below to develop a complete succession plan that fits your family, your farm and your future.


FAMILY MEETING: Set up a formal meeting to discuss succession planning. Complete "Conversation Starters" and include an invitation to add items of concern to the agenda.

DEFINE SUCCESSION OBJECTIVES: With your completed "Conversation Starters" and "Goals Clarification Worksheet" in hand, begin to define your succession goals. Most goals fall into three categories: 1) improving the integrity of the operation; 2) enhancing the family’s financial security; and 3) preparing the next generation to lead.

CONSULTATION WITH THE AID OF A FACILITATOR: To effectively guide the consultation, the facilitator should have expertise and experience in one of four fields: legal, accounting, financial or counseling (see the "Selecting an Adviser" tool). The consultation should be designed to review succession planning principles, methods and techniques and ensure input from all active family members. Be sure to come with the intention of discussing specific succession goals.

DISCOVERY: Develop a thorough assessment of the financial, legal, business, family and personal data on the operation as a whole and each family who is active in the farm. The financial information should include cash flow, profit/loss, outstanding debt and a detailed balance sheet. This phase may warrant a tax review. Don’t forget to evaluate legal documents and investment plans, real property and pending transactions. Continue to meet with all active family members and other professional advisers. This is the time in the planning process to evaluate current business structures, financial information, accounting history and estate planning documents.

PRELIMINARY PLAN: The preliminary plan is an assessment of your current situation relative to your goals and objectives. It’s a culmination of the recommendations, consequences and agreed-upon action steps. In this phase, we detail our findings and recommend specific areas that may need to be addressed to meet your succession goals and intentions. The preliminary plan includes a cash flow analysis of the operation and a financial analysis for each active family member. Preliminary recommendations related to ownership transition, leadership development, estate planning and financial security will also occur during this part of the process.

FINAL PLAN: A final plan is drafted based on the results of the preliminary plan discussion, suggestions of the family, continuing research and counsel of the respective planning team. The plan may incorporate recommendations for ownership transition, leadership development, an estate plan and financial security along with the rationale and explanatory information to support the various recommendations. An implementation schedule with action steps to achieve the family’s succession goals is also an important component of the final plan.

IMPLEMENTATION: Implementation is the process of creating the legal documents, writing the financial instruments, adopting the accounting practices and learning the practicalities of leadership. This stage may include working with other professional advisers to ensure compliance with the plan; assigning legal, financial and leadership recommendations; and assisting the advisory team to ensure timely implementation.

ANNUAL REVIEW: A succession plan must remain fluid to ensure successful results. It must adapt to the changing legislative landscape, business environment, social structure and familial relationships. It must be applicable to a growing operation and provide room for opportunities. Annual reviews include active monitoring of related components of the succession plan, renewal of family succession objectives, progress and corrective recommendations. Responding to the concerns related to succession planning, case-specific questions and other matters relative to plan recommendations also need to be annually reviewed.

You can e-mail Kevin Spafford at 

The Four Pillars

Every comprehensive farm transition plan should include these four pillars of succession:

FINANCIAL SECURITY. Good financial management is imperative for lasting security.

MANAGEMENT CONTINUITY/OWNERSHIP TRANSITION. Maintaining management strength is the focus as we evaluate transition options.

LEADERSHIP DEVELOPMENT. People management, team development, project coordination, business design and professional growth are critical to continuing the operation’s overall growth and lasting success.

ESTATE PLAN. This element is designed to maintain the family’s financial security, plan for equitable distributions and mitigate estate tax liability. 

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