By Greg Wolf
The end of one year and the beginning of the next is always a special time of reflection and anticipation, assuming those two states of mind haven't been crowded out through a stressful holiday season. I have been sentimental enough over the years that as I transition from one calendar year to another, I like to think about the bigger picture of transition that is going on in my life, and the fact that where I am today is just another step in a ongoing, changing journey. I've been a user of a day planner for a score of years or more, and this is the time I update my pages for the new year. In so doing I can't ever archive the old without a run through pages from the the past year, and years, and reading them as a diary of what has come and usually gone.
In any business, year-end can represent an almost frantic time of transition, as accounting processes close, new ones open, and tax planning reaches fever pitch. This year in particular speaks of transition as news from Washington, D.C. focuses on averting the infamous "fiscal cliff." Regardless of the specific policy outcomes and the changes that may or may not take place from 2012 to 2013, it surely seems like there is a transition taking place and much of the uncertainty regarding the entire landscape of taxation for a generation to come is going to come into a clearer focus.
Sometimes a transition has been in the works for some time but we just haven't "seen" it yet. That may be true of such things as tax policy--the "fiscal cliff" was a surprise to no one--but more often this is true of much bigger things in our lives than marginal tax rates. Over the last couple of days we have been commemorating and celebrating the life of our oldest daughter as she has turned 16, and that brings this thought of transition into sharper focus for me. It is not just about watching her turn another year older, but watching almost an entire childhood slip into memory (granted, a fresh and very special memory), and giving a new urgency to our hopes and expectations for her future.
Since most farms and ranches are family owned and operated, the transitions taking place in a family are woven into the business. Parents growing older and children growing up also raise issues of succession and leadership. And success and opportunity are not just to be celebrated, although they are, but they also raise issues of compensation, taxation, and estate planning. In fact, estate planning and succession planning are really all about preparing for, and guiding, a long transition--the former a transition of ownership, and the latter a transition of management. While uncertain policies make those plans more challenging and problematic, when viewed from the long arc of a business trajectory, many of the transition aspects can be addressed outside the context of specific policies. Then, those policies can be used to influence the timing and implementation of planning. For example, the current uncertainty regarding estate tax law deserves some immediate attention, because there may be opportunities slipping away or opening up that are worth pursuing. But at the same time, they likely won't change who will be inheriting the farm, or the business.
Regarding life transitions, sometimes there isn't much to do but enjoy them--at other times there are things that should and must be done to prepare. For family businesses too, preparation always involves thinking strategically, or more simply, looking ahead. It doesn't take any creative thinking to figure out that in five years our 16-year-old daughter will turn 21, and so we can anticipate some of what could be a part of our lives then. The same is true for farms and ranches, and it is valuable for farmers and ranchers to consider that "long arc" that stretches out ahead and what some of the more obvious features of that future business landscape will look like. That will help build the structural framework for business planning, whether including estate, long-term tax planning, succession, or retirement.
Yet, planning and preparation must be balanced with living in the present. I have had times where I focused so much on future plans that I have been robbed of the peace of living for today, and especially enjoying and appreciating the blessings and relationships that are a part of my life today. That leads me to my closing thought for this column regarding life transitions--that of giving thanks. Even when transitions are stressful or bittersweet, there is always, always, always something--and usually many things--that are worth being thankful for, and expressing it.
Editor's note: Greg Wolf is a consultant with Kennedy and Coe, LLC (www.kcoe.com) and works to help clients of the firm navigate toward better returns in all areas of their businesses. He is based in the firm's Pratt, Kan., office and can be reached at 620-672-7476.