This is a continuation of last week’s column on estate planning for farmers as an important part of financial literacy, which has an impact on your financial wellness and that of those around you. There are a lot of misconceptions about estate planning, however, we should see the benefit of planning and the cost of not planning in advance. Most of us have borne witness to how bad it can get.
A good estate plan should have more than the power of attorney and will. It should also include things such as insurance, family law, trusts, transferring of a property within your lifetime and transferring of a property in cases of your passing. Below are some more things to take into consideration for estate planning for farmers and agripreneurs:
Creating a business entity might be necessary: Most farmers operate as sole proprietors, but establishing a business entity, such as a Close Corporation (CC) or any other form may provide benefits and ease for estate planning purposes and succession planning. A well-structured business entity with legal standing may help protect your personal assets, make the transfer of ownership simple and easier, and have a standing framework for the ongoing management of the farm.
Consider life insurance/life cover: Life insurance is said to be a valuable and necessary tool in estate planning for farmers and agripreneurs. This is because it will help provide liquidity to cover estate taxes or any other outstanding debts, which will ensure the business continuity of your farming operations without financial strain. If this is something that may work for you, you can contact an insurance professional to select policy coverage that suits your profile and your needs.
Communicate with family members: It is important that you communicate with your family with openness and clarity. Make sure that you discuss your intentions with your heirs to manage expectations and avoid potential conflicts. These discussions can also be facilitated by a mediator to help ensure that everyone understands and respects your wishes.
Farm operations going concern: As with most businesses we would assume continuity of farming operation in perpetuity. Thus, it is imperative that you create a plan with a long-term futuristic view, beyond your abilities, for generations to come. The planning process involves identifying a person to be trained as a successor, developing and documenting standard operating procedures, and policies, and creating partnerships or agreements with neighbouring farmers.
Again, you are advised to consult with professionals within the industry, such as tax accountants/advisors’ estate planning attorneys, or agricultural consultants with experience in estate planning.
* Mekupi Kambatuku:
Managing Consultant at Simpli
Business Advisory