The Team Approach to Transition Planning Pt 3

Written By: Dr. Alex White

Do you have a “go-to person” for advice?  Children often rely on their parents or grandparents for advice.  Adults often rely on certain friends.  My students, well, they rely on Wikipedia, Google, or YouTube.  Farmers often rely on their accountant for advice – about everything related to the business. 

Relying on only one source of information may not be the best idea when it comes to transition planning. 

There are a lot of issues related to transition planning that need to be discussed and analyzed: Taxes, Liability, Ease of Transfer, Management Control, Communication, Cash Flow & Profitability, etc.   You need to develop a transition planning team so that nothing major slips through the cracks. 

So, who should you consider for your transition planning team?

  • Accountant – great for income taxes for different forms of legal organization (LLC, S-corp, etc) and retirement plans, as well as tax implications of gifts and trusts.
  • Attorney – they can guide you on the legal and liability exposure of different forms of organization. They can discuss the “mechanics” of various estate planning tools such as wills, power of attorney, advance medical directives, gifting strategies, and trusts. They can advise on buy/sell agreements and operating statements. **Choose an attorney who has experience in estate planning**
  • Lender/Financial Agent – having a team member who understands and can explain the financial implications of your options can make your life a lot easier. Understanding your current and projected financial condition – liquidity, solvency, financial efficiency, profitability, and repayment ability will allow you to make a better business decision.
  • Insurance Agent – Insurance can be a powerful tool in transition planning, but too often is used as a substitute for planning. “Just buy this insurance policy and use it to pay your estate taxes or transfer your business…”  Ugh, I cringe when I hear this statement!  Insurance is a tool, and like any tool, it has its proper uses and its “not-so-proper” uses.  (i.e on farm children get farm assets and non farm child gets insurance policy; used for end of life medical expenses and much more)
  • Other Business Consultants – some other influential people in the agricultural arena are veterinarians, extension agents, and crop consultants. Consider having at least one other business consultant on your transition team.
  • Business Partners – You probably want to include your current business partners and future partners on the team, this may include family members such as spouses.
  • Mediator - “Wait, what?!  A mediator?  We don’t need a mediator, we’re a family!”  And we all know how open and honest most of our family communication is, don’t we?  Let’s face it, there are natural reasons why family communication is limited.  That’s why an outside mediator might be a valuable part of your team. 

Do you really need all of these professionals on your team – probably not. Will it hurt to have them on your team – probably not. Will they help you and your family make better decisions, probably so. They can provide valuable guidance that can:

  • Reduce your income tax liability
  • Improve the financial condition of your farm
  • Reduce or avoid estate taxes
  • Protect you, your family, and your net worth from liability
  • Help you prepare for your retirement
  • Keep your family business in business (and successful!)
  • Keep your family together (and talking to each other!)


The next big question is, “what will it cost me to have these folks on my transition team?”  I can’t answer that, as it will be different in every situation.  Talk with these people to see if they are interested and how they would like to be compensated for their services.  Regardless, get the people who can provide you with the advice and guidance you need.