Business of Agriculture: Building Your Succession Planning Advisory Team

May 12, 2015 3:25 PM ET

Originally posted on the Farm Credit newsroom

By Rick Hermonot and Jon Jaffe

Rick Hermonot and Jon Jaffe are consultants with Farm Credit East, working out of the Dayville office. Rick has been with Farm Credit for 27 years, and Jon has been with the organization for 31 years.

Developing an effective succession plan that will protect your assets and help you manage the smooth transition of your operation is a process that involves many complex decisions. The good news is that you don’t have to go it alone…in fact, you shouldn’t. Instead, given the legal, financial and business issues at stake, we recommend that you work with a team of professionals to help you make the best decisions possible. This team should include:

  • A business consultant who understands agriculture and ideally has a working knowledge of your industry and your specific operation
  • An accountant who can advise you on the tax implications of different scenarios
  • An attorney to help advise on legal issues, draw up contracts and other legal arrangements with successors and potentially other family members
  • An appraiser to value your land, equipment, facilities, herds and any other assets owned by you and your business
  • A family counselor or mediator, if needed, to help facilitate open and honest conversations among family members, including those working on and potentially taking over the operation, and those who have opted for off-farm lifestyles
  • Your lender, who can advise you on loan structures and other financing options to facilitate the transfer, for both you and the next generation

It’s critical that you find competent advisors in all of these areas. When selecting members of your team, you should meet with multiple practitioners in each discipline and choose the professionals who seem most knowledgeable and experienced. It’s also important to consider who you’ll be able to work well with long-term as you develop and implement your succession plan – which may cover years or even decades.

Succession planning can be a challenging process, rife with financial, business and emotional issues that need to be resolved. Your best first step is to find the right professionals to help you navigate the process so you’ll be able to enjoy your retirement, and your successors will be well-positioned to take over and lead your operation to even higher levels of success.