Components of a farm succession plan
By Nick Betts - Business Management Specialist / OMAFRA
Succession planning is a continuous process to plan for the transfer of knowledge, skills, labour, management, control and ownership of the farm business between one generation, sometimes known as the founder or retiring generation, and the next or successor generation. Succession is a process and not an event; it takes time and effort to work through and develop a comprehensive plan that best meets the needs of the farm family.
There are two main parts to developing a succession plan: (1) the "process" - discussing it, thinking about it, researching options, planning, deciding and (2) the "documentation" - recording the decisions through a written succession plan.
See OMAFRA Factsheet Farm Succession Planning Steps and Checklist, Order No. 10-025 for information on the planning process. This Factsheet deals with the components of a written succession plan.
Main Elements Of A Succession PlanA succession plan deals the transfer of three main areas:
- management and decision-making (control)
- ownership (the actual assets).
Management and decision-making transfer needs to be supported by a training and development plan. It will help to ensure that the next generation has the necessary knowledge and skills to take over and successfully operate the farm business in the future.
The transfer of ownership of assets involves the actual purchase/sale and/or gifting of the farm assets from one generation to the next.
Cost-share funding is available to help develop a succession plan through the Growing Forward Business Development for Farm Businesses Program. By participating in a Growing Your Farm Profits workshop and developing an action plan, farmers can access the following advisory services and learning opportunities:
- Farm Financial Assessment (supporting financial plan development)
- Agriculture Skills Development (supporting successor training and other skills development)
- Advanced Business Planning (developing a succession plan)
- Business Plan Implementation (help with some implementation costs such as legal documentation of ownership transfer)