The day has come… the day you are finally ready to truly tackle succession planning. This exercise can be scary, emotional, and draining. But it can also be rewarding and give you a sense of clarity about your future and the future of your business. So, how do you really get the ball rolling here?
The best starting point is to contact the person you hold in the highest regard when it comes to the finances of your farm operation. Usually, a CPA with experience in agribusiness and wealth planning is a great starting point. Not only will they be able to address your needs from financial statements to family matters, but you should discover that their background creates a special level of caring and investment in your needs and the future needs and success of your operation.
Once you have set a date to meet with your trusted advisor, it is time to gather some important information. Here is a checklist of financial information and documents you will need to start things out on the right foot:
- The complete history of your farm or agribusiness. Some thoughts to consider…have you always used the land or was it ever farmed by someone else? Who else is involved in your operation?
- The current estimated value of your farmland. If you aren’t sure where you stand here, your CPA can assist you in beginning the all-important valuation process.
- Information related to mortgages, sale agreements, etc. that are tied to the farm and business.
- Personal and business tax returns. Whether you are establishing a new accounting relationship or enjoying one that spans many years, expect your CPA to need to look at returns from the last several years.
- Recent financial statements for the farm business, spanning the last three to five years.
- The details about how your farmland was obtained, how your assets are registered and how you currently run your business operation. Some thoughts to consider here… what was the original cost of your land and buildings and their legal description? Do you run your business as a sole proprietor, a partnership, an LLC, or as a corporation? Be prepared to share these specifics.
- A schedule of all equipment with purchase dates, cost, and depreciation considerations.
- An up-to-date will. Make sure it reflects all desired family members and that all vital information such as ages and addresses are up to date.
- Current copies of your Health and Financial Powers of Attorney.
- Current Social Security Statements of Benefits.
- A listing of life insurance policies.
- Copies of any and all trust documents.
Yes, this is a lot of information to gather and share but, reviewing this information will allow your CPA to get a better idea of the bigger picture — where the farm business has been, how it’s positioned to grow, who will be involved moving forward.
Ready to start this all-important exercise? We are ready to help you every step of the way. Reach out to our team to start succession planning today.