December 2023 - 87

BUSINESS
structured to weather the various
financial storms that will come?
How can investments be structured
to align with mom and dad's risk
tolerance? If farmland plays a role,
how can leases be structured to
protect the farming operation and
allow it to prosper, while at the same
time provide for mom and dad?
In some cases, part of mom
and dad's income may come from
the next generation purchasing
farmland or operating assets.
How can that sale be structured
to minimize taxes and protect the
farming operation, yet provide
adequate income for mom and dad?
Estate and wealth
transfer plan
Many farm families have children
who are active in the operation
as well as those who are not. A
common dilemma is how to provide
a fair inheritance to inactive heirs
without harming the operation or
creating family conflict.
The estate plan should address
where assets go at first death and
second death. The questions of " fair
versus equal " should be addressed,
as well as identifying a plan to
minimize and pay estate taxes. There
are many strategies that can reduce,
freeze, or in some cases, eliminate
the estate and income taxation
associated with death. If so, would
this be appropriate in your situation?
The following questions are
examples of some topics that should
be considered when developing
an estate plan. Is the financial
independence plan so secure that
lifetime gifting may be considered? If
so, what are the appropriate strategies
to use? If estate taxes cannot be
eliminated, what is the most efficient
method of paying those taxes?
Questions such as these are
important and should be discussed
with your financial planner, tax
accountant and/or attorney.
Written farm
succession plan
In our experience, a plan not in
writing is a wish, not a plan. But
an effective farm succession plan
W
means more than just who will own
the operation and when.
On the people level, is the next
generation prepared to lead?
Are mom and dad empowering
the next generation of leaders in
the family? Have you identified
weaknesses in management,
operational or relational skills in
your future leaders? If so, how are
you providing training to master the
necessary skills?
Does the family have open and
honest communication between
active and inactive members, and
do they trust one another? Do
all members of the family - and
their spouses - understand what
the plan is? If not, will the lack
of communication cause conflict
within your family?
These issues should be addressed
before transferring control and
ownership to the next generation.
The process may be more
far-reaching than you expected.
Some of the topics are foreign
to many farm families (such as
the financial independence and
wealth management portions),
and the best results may come
from a team effort. Your CPA and
attorney may play valuable roles
in this process; however, you may
benefit from having a " quarterback "
with specialized expertise. The
quarterback takes direction from
the coach (mom and dad) and helps
to implement the game plan.
In our next article, we will
address why every operation needs
two succession plans for complete
financial security.
Jeffrey DeWald and Michael Cohen
are registered representatives of
and offer securities and advisory
services through Lincoln Financial
Advisors Corp., a broker-dealer
(member SIPC) and registered
investment advisor. This information
should not be construed as legal or
tax advice. You may want to consult
a legal or tax advisor regarding this
information as it relates to your
personal circumstances. CRN5727541-060723
Michael
Cohen can be reached by
email at Michael.Cohen@lfg.com.
Jeffrey DeWald can be reached
by email at Jeff.DeWald@lfg.com.
For more information, visit www.
agsuccession.com.
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December 2023

Table of Contents for the Digital Edition of December 2023
