Facing reality can prevent a nightmare scenario

Neglect succession planning for your family farm, and you could leave your loved ones with a financial and emotional disaster, says Trevor Dickinson. Carry it out properly, and you'll earn their lasting respect.

- Trevor Dickinson

Unfortunately, when considering the future, many family business leaders refuse to think “When I die”, preferring instead “If I die”. Because of this denial, they never get around to planning what will actually happen when they do die, even though such plans could avoid or alleviate financial and emotional pain.

The two most predictable consequences of the failure to focus on long-range succession planning are the faltering of a business left without a leader, and lasting bitterness amongst family members resulting from fights over control. But there are other effects, as well. A business may become crippled by the need to use limited working capital to pay taxes. Yet these can easily be avoided or reduced with the help of a lawyer, a tax adviser and basic estate planning techniques, provided this happens beforehand.

FAMILY STRIFE

Another result of a failure to plan for death is the increased possibility of a battle among the children (or between the children and the surviving parent) for control of the business. If a fight of this nature breaks out, hostility can increase to the extent that compromise becomes almost impossible and the matter can land up in court and involve huge legal fees. The result of no one having figured out how to share the goose that lays the golden eggs is that no one can see an alternative to killing the goose.