Operating a ranch can be an intergenerational matter. Parents may raise their children on the ranch and rely on the work of many family members to keep operational costs manageable. Many ranch owners are proactive about establishing plans to protect their land.
They may hold the ranch in a trust to protect it from divorce, creditor claims or family members listing it for sale after they die. They may also draft estate plans early in their ranching careers to protect their ranch in case they die unexpectedly. Some people think that because they have already transferred ownership of the ranch to a trust no further planning is necessary.
However, it is often important to address the management of the ranch in addition to the ownership of the ranch. A succession plan can be incredibly valuable for those whose income relies on successful ranch management.
What is a succession plan?
A succession plan is a document that dovetails nicely with an estate plan or trust. Ranchers can identify a specific family member or possibly several family members to fulfill their operational duties after they die or become incapacitated. Succession plans can explain in detail the work that a ranch owner performs.
A succession plan can contain key information that the owner cannot explicitly share with people in other locations. They might include information about industry contracts, such as the information about the professional who provides stud service to the ranch. They can provide a list of ongoing projects that require occasional effort on their part. Succession plans can even include information about financial accounts and obligations that may not be known to others.
In some cases, a ranch owner creating a succession plan may also want to draft financial powers of Attorney so that the person they authorize to take over their role can temporarily handle the ranch’s finances if they become incapacitated. A succession plan allows for the smooth continuation of operations without issues that might affect the profitability of the ranch due to unanticipated disruptions, like the owner getting hurt in a car crash.
Taking the time to draft a succession plan can help protect a ranch and prevent family members from fighting over ranch operations in an emergency scenario. Ranch owners often need to address the needs of their ranch in addition to the ownership of the ranch before something happens to them.
