Structuring your business for generational transfer

Transfer of land is often the initial focus with succession planning; however, to achieve the best outcome for all involved it is often better if it is the last consideration.

Key points

• Business structures which enable financial independence between generations provide financial security for the parents in retirement while preparing the next generation with the ability to take on new business opportunities.
• The business structure can be adjusted or transitioned as each generation moves into or out of the business.

Introduction

Many options available to farming businesses to facilitate generational transfer depend on having appropriate business structures in place. While sound planning, clear communication and careful financial analysis are key success factors in generational transfer, the family’s legal business structure and how its particular advantages and disadvantages play out needs to be assessed and understood early in the transfer process to ensure the needs of each generation are met.

Please note: In the context of this Fact Sheet, generational transition, generational transfer and succession planning refer to the same process and the terms can be used interchangeably.