Farm transition plan is two plans in one

The legacy you pass on is only half the farm transition plan process

It's helpful to recognize two distinct goals in your legacy transfer plan for the farm. The first is to provide for your lifestyle throughout the remainder of your life. The second is to provide the legacy that will transfer to the next generation.

Related: 7 tips for developing and reviewing a farm transition plan

Legacy transfer planning is often focused tightly on the process and the assets that will move to the next generation. But the legacy is only half the process. By carefully providing for your own lifestyle for the remainder of your life you assure that the farm transfer will be smoother and less likely to be disrupted by unexpected events.

It can seem more complicated to be working on two farm transition plans but in fact, by organizing this process into separate processes, you and your family benefit in a couple of ways. First, you are clearer on the goals and processes for providing for your needs. Second, you are clearer on the legacy you intend to leave and the process that will assure it transfers successfully. As a result, you increase the likelihood of success across the board.

The Lifestyle Plan
The lifestyle plan should use dedicated assets that you plan to consume over the life of you and your spouse. This includes life-time income, incapacity protection and long term healthcare protection.

The Legacy Transfer Plan
Other, separate, assets are part of the legacy plan. By separating the two, the legacy is protected from your lifestyle needs and any potential risks associated with poor health or disability you might encounter. The legacy transfer plan can be more specifically focused on how to structure the business so it is most efficient under its new management. And this plan structures the transfer process to reduces the taxes paid.

If this blog has got you thinking about your own farm transition plan, get in touch with my office ([email protected]).

The opinions of Rich Dunn are not necessarily those of Farm Futures or the Penton Farm Progress Group.

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