Farmers work hard to ensure a positive future for their farm and family, and after years of hard work you don’t want to leave anything to chance. It’s important to establish a plan for transitioning your farm. Every family is unique, as is their farm and the vision for it.
Published: November 19, 2020
Updated: November 19, 2020
Many farmers across Canada are thinking about the succession planning journey. You have worked hard to build a prosperous farm and want to make the best decisions for continued success in the future. You need clear answers to your succession planning questions to enable you and your family to make the right choices.
Follow along through this guide to see how BDO can help you and your family manage the farm transition journey.
Are you ready to begin the transition journey?
Sometimes it helps to take stock of your starting point. BDO’s Family Farm Health Check begins with your family completing an online Discovery Questionnaire. You will receive an individual report with your responses, along with a combined graph providing insights into everyone’s perceptions and priorities. A BDO Business Transition Advisor will meet with your family to discuss the results. A Family Farm Health Check allows you to understand your family’s perception of their preparedness for farm transition.
Stage I: Transition starts with a plan
Build the plan
For farm families with multiple stakeholders and a willingness to learn and collaborate
Your Business Transition Advisor will engage your family in a series of facilitated meetings, interviews, surveys, and other activities to develop a plan for transitioning management and ownership of the farm. The emphasis is on communication, collaboration, and family harmony. We’ll provide a comprehensive report including a prioritized list of strategies, detailed action plans, and a timeline for implementation.
Set your direction
For farm families with limited stakeholders and budget
After spending time to understand your family and your farm business, your Business Transition Advisor will focus on a vision for the future, and the challenges you face to get there. Knowing where you are now and where you want to be will enable us to make clear recommendations on how to reach your desired goals.
Stage II: Complete the journey
Once you have completed Build the Plan or Set Your Direction, you will know what is needed to build a successful future for your farm and family. You will then be ready to Complete the Journey, the action stage of your family business transition.
Your Business Transition Advisor and the rest of the BDO farm succession team are available to accompany you and your family throughout the transition journey. We will coordinate BDO resources and your other advisors to ensure you have the best opportunity for success.
Prepare the family
- Family participation policies
Family members considering a career with the family farm need clarity about their potential future role and opportunities for ownership. We will work with you to create policies for employment, ownership, and a code of conduct to ensure there is complete understanding about a career on the family farm.
Prepare the farm business
- Communication and decision-making
We strive for open and safe communication amongst family members to reduce conflict and promote effective decision-making. We will provide training for the development of communication skills, governance forums, conflict management, and decision-making processes.
- Farm business plan
Both generations should agree on the future direction of the farm business. This facilitated business planning exercise aligns the enthusiasm of the next generation with the wisdom of the current leaders. It will help develop the management skills of the next generation and provide clarity on how the farm can succeed while supporting both generations.
- People plan
Clear authority, responsibility, and accountability for farm management roles reduces the opportunity for conflict. BDO HR professionals will review the farm roles and responsibilities to ensure they meet the needs of the business during the transition and into the future.
- Leadership development and succession
Eventually the farm leadership will change. Leadership transition works best when the next generation is prepared and the plan is clear. Our HR professionals will help clarify the roles of both generations, and assist the next generation with developing the necessary skills to assume leadership.
Prepare the owners
- Ownership transition principles
We will work with the current and future owners to explain who is eligible for ownership, when they can become an owner, and how they become an owner. Equally as important are the principles by which owners exit from ownership (voluntarily or involuntarily), how owners make decisions together and how owners get paid.
- Written ownership agreements
The Ownership Transition Principles outlined above will form the basis for a written Shareholders’ or Partnership Agreement. Among other benefits, this agreement will help protect your farm and family from death, disability, disagreement, divorce, and debt. We will facilitate an exercise to develop the detailed provisions for an ownership agreement from which your lawyer will draft a legal document. All current and future owners will sign this important agreement, establishing the legal arrangements for entrance, exit, governance and other rules of ownership.
- Personal financial plan
The senior generation needs to understand their future financial needs and the resources available for meeting those needs. A BDO Wealth Advisor can help you determine what is required from the farm for income and financial security.
- Ownership transfer
When it is time, we will help you with the actual transfer of ownership of the farm, including the entrance of the next generation and perhaps the exit of the senior generation. At this stage, our farm transition team will help with valuation, tax and legal structure, terms of payment, and other conditions.
- Wealth management
Ownership transition often means transferring your wealth from your share of the farm to financial investments. Investments should be professionally managed to protect your capital and provide income for your needs.
- Estate plan
Planning for death is never easy. Family members should be confident that the farm and other family assets will be distributed to their intended beneficiaries in an orderly and tax effective way. We will work with you, your family, and your lawyer to help create wills, powers of attorney, and other elements of the orderly distribution of an estate in the event of a death.
BDO can help
While you’ve worked hard to build your farm, the ownership of the farm will eventually transition to the next generation. Read more to learn about our special offer.
