Succession Planning in the Agricultural Sector
Published May 23, 2018
Associated Areas of law
What is a succession plan?
A succession plan is the identification of the most effective method for transfer of management, control, ownership, knowledge and skills, either inter-generationally or to a non-family member, based on the circumstances and goals of the business owner and the implementation of such methods in consultation with the appropriate professional advisors.
Who benefits from a succession plan?
While all businesses can benefit from a properly drafted and implemented succession plan, those involved in the agricultural sector have some unique advantages available with respect to succession planning.
If you operate a fishing, farming or woodlot business, whether incorporated or unincorporated, a discussion with your professional advisors could reveal opportunities available for you to reduce taxes and maximize the estate value available to you in the event of a succession of your business.
What are the benefits?
There are numerous legal and practical benefits to implementing a succession plan including:
• Obtaining exemptions or deferral of various taxes;
• Taking advantage of funding and financing programs specific to the agricultural sector;
• Business continuity; and
• Providing a clear direction for your business and a clear definition of the responsibilities of all involved.
What will I need to do?
Step One: Define your goals
If you are interested in formalizing a succession plan you should first determine what your desired end result is with the plan (such as retirement and transfer to a family member or partial retirement) and, if appropriate, discuss your plan with your family members.
Step Two: Speak to a professional
Once you have determined your goals it is time to discuss your options with a professional advisor such as a lawyer, financial planner or accountant. The professional advisor will request certain financial and corporate information which they will require in order to provide you with worthwhile advice with respect to your succession planning. On reviewing the information they can assist you in weighing your various options.
Step Three: Create the plan
Once your professional advisor has presented you with the various options, you will need to make decisions with respect to which option is preferable. Your professional advisor can then devise a succession plan to facilitate the future transfer. This plan may include preparing documentation to reorganize the financial or corporate structure of the business including incorporating companies, settling family trusts and migrating and transferring real property.
Step Four: Implement and monitor the plan
Finally, your professional advisor will assist you in implementing the succession plan including preparing the necessary documentation required and referring you to the appropriate individuals for further advice and may either assist you in monitoring the plan on an ongoing basis or give you the tools to so monitor.
When should I start?
Now. Ideally you should start planning for the succession of your business now to ensure that any future transfer of your business will be able to be structured in a way that will best benefit you.
Regardless, it is important to consult with a professional if you intend to transfer your business to a family member or to an unrelated third party in the future.
Patterson Law’s Expertise
Patterson Law is a full service firm made up of lawyers with a wealth of experience and knowledge including experience in structuring succession plans for all types of businesses and individuals including those in the agricultural sector.
Our lawyers would be pleased to work with you and your other professional advisors as appropriate to structure a succession plan best suited to your goals.
This memorandum is not intended to contain advice specific to your situation. Your use of this memorandum should be reviewed with your legal adviser.