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Business Succession Planning Tools

Create a plan and keep that plan up to date.

Cattle Industry Convention and NCBA Trade ShowBusiness planning succession is often avoided due to fear, noted Michael McCormack as he addressed cattle producers attending a Learning Lounge session offered Feb. 2 at the 2017 Cattle Industry Convention & NCBA Trade Show in Nashville, Tenn.


McCormack, a financial advisor with Lincoln Financial Agribusiness, explained that the most common “fear” scenario he sees among family businesses — such as farms and ranches — is that the owners do not teach the next generation how to run the company because they do not want to lose control.


The situation is often compounded because the majority of individuals in the second generation will not challenge the tradition being set by the owner. Or, McCormack said, the second generation becomes trapped and often feels the sentiment, “Every time I get close to the end zone, Dad moves the goal posts.”


However, multi-generational family businesses should stop and consider an even bigger fear, McCormack said. “If no succession plan is in place, the government and IRS will step in and make the plan for you.”


With that said, McCormack encouraged farm and ranch families to take steps to plan for transition of the business to the next generation. He noted that an estate-planning advisor, attorney and accountant are likely part of the planning team, but the owner must typically be the one at the center initiating the process.


As a starting point for succession planning, McCormack suggested pondering the following series of questions, and then discussing those scenarios with the family, as well as the succession planning specialists involved.

An additional caveat to estate and succession planning that McCormack encouraged farm and ranch families to remember is that once you have a plan in place, you must continue to keep that plan top of mind — and share it with heirs. He noted that “times change and people change,” which means that over time, the plan may also need to be updated and changed.


As examples of possible necessary changes, McCormack said laws regarding income and estate taxation change, as do laws regarding business entities. Likewise, family dynamics may change — and the business itself may change by growing, shrinking or diversifying.


Because of these potential changes, McCormack suggested at least annually reviewing the following:

Lastly, McCormack underscores that succession planning is not impossible. It all begins by taking the first step.


You can learn more about the succession planning services offered by McCormack’s company, Lincoln Financial Agribusiness, at: http://lincolnagservices.com/page/agservices.

 

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Editor’s Note: Field Editor Kindra Gordon is a freelance writer and cattlewoman from Whitewood, S.D. This article was written as part of Angus Media’s coverage of the 2017 Cattle Industry Convention. For complete coverage, visit www.angus.media.





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