Focus On Making Your Succession Plan Fair, Not Equal
When it comes to succession planning, Travis Shuring, a financial advisor with Edward Jones, wants to make sure families are protected. This is something he does by helping put the proper plan in place, but also making sure expectations are accurate for everyone involved.
“The first thing I remind clients is that when we look at your legacy, fair is not always equal,” Shuring says.
According to Shuring, what might be considered equal doesn’t always make sense when the succession plan involves family members who actively work on the farm and others who do not.
“One of the things I do is have a discussion about what you’d like to do for the other siblings,” he says. “Maybe other assets are available we can supplement with and split to make fair. Maybe we have an insurance policy that only names the siblings and children who are not part of the current ag production, and they receive those assets. Those active on the farm can receive the farm assets.”
Planning for those other assets is an important part of the legacy plan and something that should be considered sooner rather than later.
“The sooner we get something started, the more time we have for it to work,” Shuring says. “It’s less about timing the markets and more about time in the market.”
Planning for the Right Assets
One of the biggest assets Shuring works to build into a legacy plan is life insurance. More importantly, the right kind of life insurance.
“People go get life insurance and I ask them why they have this type of life insurance and they can’t tell me,” he says. “I want them to know why they have an investment, why they have life insurance and why they have an estate plan. And do you have the right kind and amount of insurance?”
Along with life insurance, he encourages families to consider disability insurance, or setting aside funds to use as a sort of disability insurance.
“Life insurance is great, but life insurance is not about you – it’s about your family. However, in the event you become disabled, hurt or can’t work on the farm, the life insurance hasn’t kicked in and we have to have a plan in place,” Shuring says. “Maybe we can’t supplement to the point that a disability policy or supplemental insurance might provide, but we can still have funds that are reserved and we’re hoping not to have to use.”
Four Tips for Building the Plan
Shuring’s advice for building your legacy plan begins with having spouses present in the process from the start. But his next recommendation is not waiting too long to bring children into the conversation.
“Don’t be afraid to bring your children into the discussion,” he says. “Make sure they understand your plan and your desires and what you want to happen when that time comes.”
As the process moves along, it can get complicated. That’s why he also advises relying on more than one expert.
“I always encourage folks to have a robust team in place. Talk to the tax pros and include estate attorneys,” Shuring says. “They understand the law and they understand what changes may be coming down the line when it comes to the law.”
Once your plan is in place, don’t neglect keeping it up to date. Shuring suggests reviewing your wills and trusts no less than every five years.
To hear more from Shuring on legacy planning, tune into his episode of the Farming the Countryside podcast.
