Legacy (part 4)…….Ya Reckon?
 | Author:
Denise Thompson
Denise Thompson |
Legacy (Part 4)…….Ya Reckon?
What is the difference between Estate Planning vs. Succession Planning and does it really matter?
A couple of years ago the US Small Business Administration shared some staggering and rather disheartening data: A productive business sold to non-family has a 70% chance to succeed. The success rate drops to 30% for a business that heirs/family inherit and operate. This article (Estate vs Succession Plan: Know difference) by Wesley Tucker in Farm Progress (2.28.22) also went on to say that for farms the difference in success rate can partially be attributed to operators mistaking estate planning for succession planning. Instead of thinking through how to prepare the next generation to run the business they only divide assets.
Estate Planning focuses on divvying up assets, which is sufficient if a farmer is only concerned with how to pass land and things on to the next generation. Here, there is a transfer title of assets put in motion upon death.
Succession Planning, on the other hand, focuses on a very clear plan put in place when one wishes to see the farm/ranch business stay alive and succeed financially and otherwise, both during and after the transition. This is a process…not an event! There needs to be incremental goals, with a transition from one generation to next; with stops along the way where successor gains more experience in management, responsibility and decision making. Here, the parent goes from chief decision maker to chief supporter, with a true willingness and desire to see the successor thrive.
Developing this plan is more difficult and MUST be started early to be successful. Do not wait for a tragic event (such as a death), otherwise the successor(s), who has been involved in the business, risks not being adequately compensated for his/her efforts if anything happens to go wrong before that event! The parties should hope to prevent lasting and dire consequences.
People avoid the hard conversations to “keep the peace.” But peace isn’t the goal of a relationship. Love is. And when we love someone, we have the hard conversations in service of that love. – Jillian Turecki
On March 1, 2025, from 9:30 am to 3:30 pm, the Broadwater Conservation District will be hosting a FREE WORKSHOP at the 4-H Building called FINDING FAIRNESS IN FARM TRANSITION by Elaine Froese. Elaine is a skilled speaker and facilitator and is well known and respected around Canada and the United States. This is the first time Elaine has presented in SW Montana. It is such an honor to bring her skilled services to the folks of Broadwater County and the surrounding region. Spread the word.
For the love of Ag from the heart of a western woman,
Denise Thompson
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PhotoCredit: Photo Credits: Stephen Simpson, Circa 2017
Image 1 Caption: Maybe we weren't born in the wrong generation but were instead put here to keep the old one alive.
Photo Credits: Stephen Simpson, Circa 2017
