1. Farm Succession Planning Introducing A Checklist Ag Week 2017
Maria Pippidis, Extension Educator, Family and Consumer Sciences
Dan Severson, Extension Educator, Agriculture
Laurie Wolinski, Extension Educator & Director, NE Center for Risk Management Education

2. What is succession planning?
Strategic Business Planning for Commercial Producers
Succession Planning
What is succession planning?
…it is a PROCESS that ensures the continuation of a business through the generations.
“The final test of greatness in a CEO is how well he
chooses a successor and whether he can step aside
and let his successor run the company.”
Peter Drucker, Management Expert
Succession planning is crucial if you wish to see the family business continued by succeeding generations of your family.
Succession planning is not a one-time event. Instead, it is a process that usually takes several years to do well.
Nor is it one person’s problem. The whole family must buy in to ensure a successful management transition.
Nor is succession planning the same as estate planning. Estate planning is about transferring property ownership. Succession planning is about transferring management control.
It should be about being fair to all of those affected, including off farm heirs, but not necessarily treating all heirs equally since that will more often than not threaten the continued viability of the farm.
The succession plan should be driven by family values and desires, rather than a desire to minimize taxes, or to follow the standard plan advocated by the planning professionals the family hires to help with the process.
A formal succession plan will affect every aspect of your life: Your family, Employees, Customers
Without the right employees the next generation can’t buy you out.
Succession can take many forms. You must create a plan suited to your farm business. Members of a multi-generational business enjoy a form of immortality. Something in which they have invested so much of themselves carries on after their passing.
© Purdue University, Center for Food and Agricultural Business, 2002

3. A Succession Plan Visual

4. What Succession Is and Is Not
A process
About family, people and relationships
About ownership, management and estate
About what is fair
Driven by the family values, wants and concerns
Succession is not:
An event
One person’s problem
About minimizing taxes
About equity
Driven by technical issues that are handled by lawyers, accountants, etc.

5. Farm Succession Planning Steps and Check List
Preliminary Step
Open the Lines of Communication,
Define Objectives and Goals,
Identify Successor,
Assess Compatibility of Objectives and Goals
Step 1 Collect and Analyze Information
Step 2 Generate Options
Step 3 Make Preliminary Decisions
Step 4 Design, Develop, Write and Review
Step 5 Implement and Monitor

6. Open Communication
Should involve all family member (whether in the business or not)
Assumptions at any stage about other’s wants or expectations should not be made
Takes time and patience
Say no to secrecy! Transparency is key for family preservation

7. Define Personal Family and Business Objectives and Goals
Everyone has defined individual personal, family and business goals.
A mechanism has been established to discuss general business and succession planning issues (e.g. family business meetings).
Using the above mechanism, everyone has had the opportunity to talk about individual expectations, needs, objectives and goals for themselves and for the farm business
The issue of fair and equitable treatment of family members (both farming and non-farming) has been discussed.
There have been discussions about decision-making and how this will be handled in the future.

8. Identify a Successor (s)/ Assess Compatibility
There has been discussion about who wants to take over the farm business in the future.
The family has assessed the compatibility of each individual's personal, family and business objectives and goals.
A strategy has been developed to address any serious discrepancy or incompatibility.
The founder generation has examined both the financial and human aspects of retirement.

9. Tool to Assess Skills
Evaluation of Farm Management Skills

10. Steps and Check List Walk Through
Step 1 Collect and Analyze Information
Step 2 Generate Options
Step 3 Make Preliminary Decisions
Step 4 Design, Develop, Write and Review
Step 5 Implement and Monitor

11. Farm Succession Planning Introducing A Checklist Thanks for attending
Maria Pippidis, Extension Educator, Family and Consumer Sciences
Dan Severson, Extension Educator, Agriculture
Laurie Wolinski, Extension Educator & Director, NE Center for Risk Management Education

12. Retirement Planning – Things to Consider when Developing your Succession Plan
Maria Pippidis, Extension Educator,
Family and Consumer Sciences

13. Picture Your Retirement
What is most valuable to you?
How do you see your self spending time?
How does your spouse see themselves spending their time?
How do you balance this with your support of the farm operation?

14. Estimating Household and Retirement Expenses
Estimating expenses for retirement is important so you know how much income you need to bring in; may determine level of involvement in your operation
Two Strategies:
Use % of current spending as an estimate
Use a household budget sheet and anticipate changes in expenses over time – see handout

15. Estimating Sources of Income
Social Security
Farm Income
Wages/salary
Lease/ Rental Income
Sale of farm
Pension Income
Non-Retirement Savings
Retirement Savings – IRA/401K etc.

16. Estimating Social Security Income
Using annual mailings or setting up/reviewing your social security account online

17. Estimating Retirement Savings Needs
Ball Park Estimator
AARP
AARP
Work with a financial planner
Work with Human Resources Department for off farm pension calculations

18. Implications for Succession Plan
Working now to reduce household and farm operation debt will help to make transition to retirement easier – financially and psychologically
Separating out and understanding household expenses can help you determine how the succession plan (and your income during this time) needs accommodate these expenses.
Division of labor will impact how you spend your time. Put timeframes around the transition and build the skills of your successors so they can confidently manage the farm operation and you can confidently do less if that is what you want.

19. Implications for Succession Plan
Build in contingency plans –
What happens if someone get’s injured or passes away?
What happens if the operation expands?
What happens if the operation is not successful?
Making your Retirement Dreams come true for you and your spouse is important! - communicate and build the dreams into your plans
Reevaluate retirement income and expenses annually and adjust as needed
Consider building in retirement savings for the successor generation.

20. Thank you for attending Retirement Planning – Things to Consider when Developing your Succession Plan
Maria Pippidis, Extension Educator,
Family and Consumer Sciences