15 Fundamental Questions to Ask if You Own a Farm or Ranch Business
Some thoughts from my presentations at the IFA Crop College last week in Logan, Payson, and Vernal, Utah. By definition, succession planning is a process of decision making that protects the ongoing viability of the agricultural operation, provides for the orderly transition of the agricultural operation to new ownership, and preserves family harmony. In order to accomplish these three goals for your farm or ranch business, it is essential to answer these 15 fundamental questions:
- If the unexpected happens, can my family continue to run the farm/ranch business?
- If the unexpected happens, will my family have sufficient liquid resources to hire someone to replace me?
- If the unexpected happens, will my partners pay my family a fair price for my interest in the farm/ranch business?
- Have I chosen the right form of entity (LLC, corporation, partnership) for my farm/ranch business?
- Does my farm/ranch business receive the most favorable tax treatment?
- If I have a buy-sell agreement, what trigger events does it cover: death, disability, bankruptcy, failure to properly carry out expected duties, retirement?
- Is my buy-sell agreement adequately funded?
- How is the value of my interest in the farm/ranch business determined?
- Will I have enough income to retire?
- Do I want to pass on a viable business or just a group of assets?
- Do I have a succession plan in place?
- Does my succession plan address my children’s different skill levels or interest in the farm/ranch business?
- What is my estate plan?
- What will the impact of estate taxes be on my farm/ranch business?
- What will the impact of probate be on my farm/ranch business?