It’s number-crunching time for you. We have developed a form that walks you through how much the current owner(s) will likely need to finance retirement and how much wealth has accumulated by the projected transition date to get a sense of any discrepancy. As mentioned before, when it’s clear how much is needed for retirement, everyone will have a better feel for how best to set up the farm transition. For instance, it may make more sense for the current owners to be paid a monthly income rather than a lump sum payment upon exiting the business.
Whether you plan to retire in the next couple years, or the nest 30 years, it’s a worthwhile exercise to complete now.
A similar process can be used to help determine the farm’s financial capacity to support the retirement of the current generation and lifestyle and business plans of the future generation.
Assignment
Complete the form in your Succession Planning Workbook.
Make sure to include all sources of income and expenses. It’s a good idea to get these numbers checked by a financial advisor to make sure you didn’t forget something important.
We have completed the form on financing the farm transition for both the current and future owner(s) to confirm transition is financially feasible.
