Last week’s newsletter, Your Succession Planning Team, discussed the idea of collaboration among a team of advisors to help you with your succession planning for your family farm business. Now let’s take a quick peek at who those individual advisors might be.
The exact composition of your farm business estate and transition planning team will vary by your unique circumstances and needs of the business and family members. Categories of likely professional advisors might include the following, each serving their role in a collaborative effort to best serve you and your family farm business:
Family Business Advisors:
Often serves as the neutral third party or “quarterback” of the overall succession plan and provides the initial assessment of transition readiness and helps you develop the vision for the future and the overall “game plan”. Each of the subsequent listed advisors provide specific technical expertise to execute the required action steps.
Attorney - Provides legal advice, prepares key legal documents such as power of attorney, wills, trusts, business organization documents and can provide insight into tax management strategies
Certified Public Accountant - Provides tax documentation for your business, advice for organizational changes in the business and for tax management strategies.
Certified Financial Planner - Provides advice and implements retirement investments and strategies for estate planning and tax management strategies.
Insurance Agent - Provides advice on insurance products and helps to implement life and business insurance and risk management strategies as well as financial security planning for the senior generation (i.e. retirement planning)
Lender - Provides input into the appropriate debt structure of the farm and opportunities for expansion or debt restructuring to help cash flows. Also needs to be kept aware of plans for changes to the business relative to current farm debt.
There should be a simple process for selecting the members of your succession planning advisory team. If you or individual family members already have existing relationships with certain professionals, that is a logical place to start. However, it may also be a good time to add one or two more advisors to your contact list that might be able to provide a fresh look or the needed expertise with this subject matter. Of course we all do business with people we know, like and trust. At least I do! Here are just a few things we look for when forming a team of advisors for a typical succession planning project.
- Past experience with similar situations
- References to past clients with similar situation (Some advisors may raise the point that the identity of people they represent must remain confidential until the client agrees to share that information with someone else, which is perfectly acceptable)
- Sample plans or examples of plans for review. (However, sample documents may or may not be relevant to your specific needs)
- A clear breakdown of their fee structure, including an estimated cost for various steps in the process.
A final important task related to selecting members of the team is to determine who will be the leaders or quarterbacks of the team. This person can be someone in the family, but it is usually best to select someone that has experience in this role. The person should be familiar with family owned businesses and have a broad range of business experience to help facilitate discussion about many areas of the business. This person(s) will be responsible for running the team meetings, keeping discussions and the planning process moving along, coordinating action item and follow-up. The facilitator should be an unbiased member of the advisory team working in the best interest of your business, not for any one individual.
So we’re close to coming full circle and now hopefully you can envision Eating that Succession Planning Elephant we talked about several weeks ago.