Succession Planning: Start Now To Retire Sooner

Think about the last time you asked someone how they were enjoying retirement. Most people reply they wished they would have retired sooner. Oftentimes, when we go into retirement-thinking mode, we worry about what happens next. We ask ourselves, ‘Can I afford it?’… ‘Will I have enough money to do what I want in retirement?’… ‘Who will continue my legacy?’

These questions take time and a significant amount of planning to answer. The sooner you address them and plan your farm or small-business succession, the earlier you will be able to retire. Having the right succession plan in place early on will ensure your wishes are met and help prepare your farm or business for the next generation of owners (whether they’re in the family or not).

Just like insurance, a succession plan should be thought of as a protection plan for your farm or business. The beginning stages of the succession planning process is where family dynamics come into play. You’ll have to challenge yourself to have some tough conversations and leave your emotions at the door.

Navigating Family Dynamics

Passing on your legacy to someone who will continue to believe in it and have the energy, heart and passion to make it succeed is key. Be sure to ask your children or family members if continuing with the farm or business is what they truly want.

If their answer is no, avoid pushing them to change their minds and be willing to listen. It’s tough to learn your dream is not necessarily your child’s dream, but you also don’t want your kids to feel resentment towards you for ‘making’ them take over the farm or business. Ultimately, if their heart is not in it, it is more likely that the farm or business will fail. So, don’t be afraid to consider other options for what’s best for your family and your business. This could include selling to a key employee or outside buyer.

If the next generation is on-board and excited to follow in your footsteps, then the challenge is how to divide your assets among your children, especially if some are not involved in the business. Again, the valuation of your farm or business will determine what the rest of your children receive. Some options are a parcel of land, stock in the business, purchasing a buy-sell agreement, other financial instruments, or cash. It’s important to bring in a professional to provide an unbiased opinion of what the farm or business is worth as a starting point.

Putting Your Plan on Paper

When you feel confident in your successor and have an objective appraisal of your farm or business, it’s time to draft your plan. Having a plan on paper ensures your family knows what to do in case something happens to you. You also can easily update the plan if something changes, such as retiring earlier than you originally anticipated. A succession plan should be considered a working document, flexible enough to account for unknown circumstances that may come up.

Your plan should focus on making the transition of your farm or business as smooth as possible for you and for the person, or people, next in line. It is wise to include a business overview so whoever is taking over can get a quick, snapshot look at the finances and goals of the farm or business. Other key elements include a timeline for the transition, working backwards from your ideal retirement age, and performance metrics for the person taking over to hold him or her accountable during the transition and beyond.

A trusted third-party familiar with estate and succession planning can help you put all of these pieces into place. They can make it easier to have those tough conversations and help you discuss everything that needs to be covered. They also can support you in drafting a successful succession plan.


Contact your local Rural Mutual agent today for additional tips and insights specific to your situation. The sooner you get started, the sooner you can kick back and start enjoying some well-deserved rest and relaxation.