As you transition the farm business to new management, look at protecting the outgoing management from unnecessary risk. One good tool is the retirement plan.
If you have accumulated retirement savings as part of the business transition strategy, it's prudent to protect that savings from liability. That's especially true if you continue in business with the new owner.
Some retirement plans are protected from creditors in the event of a bankruptcy or civil action in the event of claims against your successor.
The good news is that it's never been simpler and more cost effective to establish retirement plans for individuals and small companies. Your financial advisor should have several cost-effective options for you to consider.
If you use a 401(k) for your retirement plan, the business owner and her spouse employed in the business can each save up to $53,000 per year in a defined contribution plan, or up to $210,000 each per year in a defined benefit plan.
If you have the money to save, it's wise to shelter it from this risk in a retirement plan.
Consult a fee-only fiduciary financial planner for more details on your situation.
If this blog has got you thinking about your own situation, 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.