I have posted before on family farm succession. With all of the landowning farmers reaching (or well into) their retirement years, it is a subject worth revisiting.
Early and often.
Here is some food for thought: the majority of farmers are over age 55, and if you can believe it, 80% of them do not have a plan.
Recently, AgriNews published an article titled “Do’s and don’ts of farm succession planning.”
The article has some salient advice to ensure a smooth transition of your farm to the next generation or a new owner.
While you will want to read the original article, here is a summary to get you started:
Planning is the key ingredient to successful farm succession.
Yes, you need trusts and wills, but transferring an agricultural business operation requires even more planning.
Hire the right people in the right positions.
Like any closely held or small business, the fact that you are related to someone by blood (or marriage) does not necessarily mean they should be working on your farm.
[I can see your heads nodding in agreement on that one!]
“There is no birthright in farming,” according to the article.
You may have some good workers who are also members of your family, but all of your farmhands should be vetted and hired correctly.
Result? Major problems for family members.
Hope is not a strategy.
Do you want the farm to continue? Be honest.
If yes, then communicate your expectations so that the plan is clearly known.
Families need to have a legal estate and management transfer plan or a buy or sell agreement prepared. All of the concerned parties need to discuss details that go beyond the trust and will.
Is there enough money?
Farmers and rancher tend to be rich in stuff and low on cash. It has been that way since dirt was invented.
No, it is not like you need to have a super-prosperous farm ready for someone to take over.
On the other hand, the article suggests that the younger generation be prepared with a business plan detailing how they will be adding value if they join the farm.
Get it in writing.
Remember that a conversation or phone call is not a binding legal contract.
Work with your estate planning attorney. He or she will make sure that everything is legal and above board. I also find farm extension agents bring a lot of experience and wisdom to the table, too.
Remember: “An ounce of prevention is worth a pound of cure.” When making your financial, tax and estate plans, do not go it alone. Be sure to engage competent professional counsel.
For more information about estate planning in Overland Park, KS (and throughout the rest of Kansas and Missouri), visit our estate planning website and be sure to subscribe to our complimentary estate planning e-newsletter while you are there.
Reference: AgriNews (September 17, 2015) “Do’s and don’ts of farm succession planning”