Kevin Spafford, our Farm Journal columnist on family business matters, has written an excellent article for the Purdue Top Farmer Crop Workshop folks.
Comprehensive succession planning may be the most critical issue facing the American economy over the next few decades. The creators/controllers of this wealth must decide how to best pass their ownership interests to subsequent generations while still trying to perpetuate these entities. Equity may easily constitute more than 90% of a family’s financial security, retirement nest egg, and potential legacy. Yet past statistics demonstrate that only about 30% will pass to a second generation, less than 10% will pass to a third, and about 4% will go to a fourth.
The three leading causes of failure to transition to the next generation are:
1) Inadequate estate planning
2) Insufficient capitalization
3) Failure to prepare the next generation
All of this leads to a growing demand for better planning, integrated training systems, more carefully administered business issues, and the responsibility to think, act, and operate in a more formal business-like fashion. From the threats distressing farmers and agribusiness owners alike, there is no escaping the passage of progress. Threats from outside, shrinking pools of skilled employees, administrative pressures brought by legislation, and constant consolidation did not happen overnight.
I used to blow off articles like this. But then I didn't used to be 58 either. And while making reasonable plans seems to wring the spontaneity out of life for me, it does seem to calm Jan down.