Over the past few months there has been a surge in awareness efforts by agricultural publications around the need for farm families to take estate planning seriously. For example, late last week Agri-View published an article re-emphasizing the need for families to get serious about their succession planning if they would like to preserve their farm for generations to come. Our New York estate planning lawyer appreciates that the principles outlined in the article can be applied to contexts outside of farm families and are apt for all families with small businesses which may wither without proper preparation for transitioning from one generation to the next.
The article reminds readers that a succession plan is not the same thing as an estate plan. The estate plan is best viewed as one part of the process to prepare for business transitioning. The overall succession plan in not a one-time event–it is a gradual process that is completed with consultation with a variety of professionals, including estate planning lawyers. The estate planning component of the process will strategize ways to transfer assets to ensure tax savings and a smooth transition of property and responsibilities to younger generations.
Getting legal documents in place is just the beginning. In addition, the succession planning process will also involve the family elders answering questions about what they’d like their future to hold. For example, the older generation of the farm family should think seriously about what they’d like to do when their time isn’t filled with farming. The answer to this and similar question will dictate how much money will be needed to meet those goals in retirement. From there, concrete strategies can be crafted which provide the older generation with needed resources while preserving the younger generation’s ability to inherit and continue family business endeavors in the future.
The ability to retire securely while still passing on farm or business assets to children hinges on a range of factors. For one thing, diversification of assets is important. If all of a family’s assets are tied up in illiquid property then it is often a challenge to have funds for retirement. In addition, illiquid assets can make it difficult to craft inheritance plans that allow the next generation to pay estate taxes without having to sell the very assets needed to continue to run the farm or business. No matter how complex one’s situation, however, it is crucial for families not to bury their head in the sand. Coming up with solutions to these problems is exactly what professionals in these areas are trained to do.
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