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Business Planning
Ownership Transition
Financial Security
Leadership Development
Estate Tax Provisions
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Comprehensive and Coordinated, Part 1

A comprehensive succession plan is comprised of four separate, yet interrelated building blocks---Financial Security, Ownership Transition, Leadership Structure, and the Estate Plan. Due to their situation, it was very important to start with an analysis of John and Sara’s financial security. Logic dictates that until someone is reasonably comfortable with their financial situation, and the means of support for the rest of their lives, they won’t be willing to make the decisions and take the actions necessary for succession.

Design a Contingency Plan

Succession plans are usually designed to accomplish the client’s goal of transferring ownership and management responsibility to the successor during the owner’s lifetime. However, a sound succession plan must also provide a contingency plan in the event an owner’s premature death or disability forces a transfer before the intended successors are ready.

Integrate the Estate Plan to Complement the Owner's Succession Plans

Estate planning involves transferring an individual’s wealth to his heirs while minimizing transfer taxes. It also includes planning to ensure that the estate has sufficient liquidity to pay taxes and expenses without forcing a sale of the owner’s assets. So, there is clearly an overlap between a business owner’s estate plan and his succession plan.

Transitioning Ownership: 3 Strategies, Part 1

The optimal succession plan usually combines a lifetime transfer of both ownership and management of the business to the owner’s successor(s) with a contingency plan that becomes effective if the owner prematurely dies or becomes disabled.

Milestone or Millstone?

Planning for succession is a process. Since most plans are implemented incrementally, as in a gradual ownership transition, the end result isn’t really knowable. However, the process will have a lasting impact on the owner[s], the family, and the farm. Over time, it will become clear whether the family’s plan for succession is measured in gratifying milestones or grinding on participants like a millstone.