Succession Planning, Part One of Many

by Cate Moore on February 16, 2014

You may remember a couple of years ago when CCFA sent a questionnaire out asking if members were interested in succession planning.  We got a very enthusiastic response and have been trying since then to get the UC Extension folks to bring the Ties to the Land road show to Santa Cruz County.  We feel two years is long enough to fiddle with that avenue and have decided to tackle the subject head-on ourselves.

We’re not claiming to be experts, but CCFA can certainly act as a clearing house for stories, ideas, problems, questions and so forth as we explore the topic together.  We think that if we each share the little bit we know, across all of us we can find most of the answers we need.

So, while we will be publishing articles in the newsletter and online, but we hope this will be a two-way conversation.  Give us your stories, ask us your questions, and by all means, tell us when we’re blowing smoke.  We’ll provide contact information at the end of the article.

What is succession planning, and how is it different from estate planning?

Estate planning and succession planning both serve to accomplish the same end, namely the orderly transfer of your property to your heirs according to your wishes.  I feel the main difference is that normal estate planning is designed to manage the division and transfer of static, easily dividable property like stocks, bonds, and so forth, and succession planning addresses the passing on of a living, working business entity like a farm or small business where breaking up the concern’s assets will cause the business to fail.

Every succession plan needs within it an estate plan, so we will start there.  Even if your main concern is your farm, you probably still own securities, life insurance policies and bank accounts, you may have minor children to provide for, you have family heirlooms to distribute.  All of this is handled under traditional estate planning.

Everyone needs a will.  This is the best document for declaring who will care for the minor children and your desires for distributing the family heirlooms.  You can put the whole shebang into your will, but it may not be your best option.  The problem with wills is that everything gets locked up in probate until the court declares that the will is authentic and all the provisions have been handled correctly.  In the meantime, the family and the executor need to pay for the bills and taxes out of their pockets until the estate is released, then get reimbursed by the estate.  In a contended will, this can take years, which can cause great financial hardship for everyone involved.

Another common way of handling one’s estate is a revocable living trust.  In this vehicle, the property owner places all of his major assets into the ownership of the trust.  The major advantage of the trust is that it avoids probate.  The trustee can manage all of the estate’s property, pay bills, pay taxes and generally continue in business-as-usual mode while the property is divided and handed over to the heirs.

Other forms of trusts can be set up to provide for the lifelong care of disabled children, and for other special needs and can be part of your estate plan.  If any of our readers want to describe other estate plans they have seen and their benefits and pitfalls, we’d be happy to pass the information along.

We’ll keep estate planning at this quick overview unless any of you have questions or stories to share.  Also, if you have a financial planner or attorney that you feel provides good service, we will also be happy to pass that along.

Write us at:

attn: succession planning
P. O. Box 66868
Scotts Valley, CA 95066

email us at:

Future articles will address the following topics (In no particular order):

  • Scoping the property/ business
  • Deciding on the participants
  • Apportioning ownership
  • How do you add people?
  • How do people opt out?
  • What are the participants duties and responsibilities?
  • Contributing and noncontributing participants and how to fairly reward both
  • How do you declare and communicate your ideas and visions?
  • How do you factor in your heirs ideas and visions?
  • How do you distribute proceeds?
  • Do you need an external manager?
  • When do you dissolve the business?
  • Inheritance taxes
  • Ongoing business expenses
  • Business forms that encapsulate the succession plan and how they are formed.
  • Government reporting requirements
  • Questions, answers and suggestions from readers


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