Ask a farmer about his priority goal and the answer is almost always a successful transition of the family farm to the next generation. For those farmers who have children who want to take over the family farm, planning the transition cannot start too soon. Ideally, a farmer starts planning for the next transition soon after taking ownership himself by investing outside of the farm to diversify his wealth. Creating a source of retirement income outside the farm will ease the financial burden on the next generation when acquiring the farm.
Once the farmer’s children reach adulthood and become involved in the farm business, it is important for the owner to grant increasing responsibilities to the children to learn good business decision-making skills. Gifting ownership of farm equipment and cattle is a good way for adult children to gain a sense of the responsibilities of ownership.
Farmers do not retire, but they inevitably lose the ability to work their farm. Accordingly, the family needs to have a labor plan after the parent generation can no longer provide cheap farm labor. Moreover, the farm transition plan must carefully determine the appropriate price and timetable to transfer control of the farm to the children at a mutually feasible price and financing terms to ensure the financial needs of both families are satisfied. Living arrangements, estate/income tax, long-term care concerns, and health insurance all must be considered as part of a comprehensive farm transition plan.
We understand the intricacies of designing an effective farm transition plan and stand ready to help you begin the planning journey to keep your farm in the family for another generation.
