What have you done to line up your farm transition? Remember, this is a life process, not a single day event! Here are ten simple questions to get you on the path for successful farm transition.
Have you discussed farm transition with your spouse?
Remarkably, few spouses discuss what they would like to do as they get older, and few consider or talk about what they each may want to do in retirement and what is their idea of retirement.
Have you discussed farm transition with your family?
Most families fail to discuss what they may want to do with the farm or farm business. Some children don’t want to bring up the topic of Dad or Mom’s possible death or physical inability to keep farming.
Who is your successor?
Have you identified a successor? This is why a family discussion is important to know if anyone in the family is interested in the farm business. If not, is there a non-family member interested or will the decision be to sell all farm assets when its time to call it quits? It helps know sooner rather than later if any family member is interested.
Have you discussed farm transition with an ag professional (Extension, lender, land trust, etc.)?
Discussing the situation with professionals who have seen what others have done can be helpful and usually provides some valuable ideas!
Have you attended any events on farm transfer?
Take advantage of as many workshops as you can that are offered by Extension, land trusts, legal firms, etc. Not just the older generation should attend. Attending when you are the younger generation is helpful to enable the family to derive a workable plan.
Have you met financial and legal experts, such as an attorney, accountant, insurance agent, etc.?
These experts need to be part of the process. An accountant can provide you with guidance of tax implications of various actions. An attorney is needed to know the legal ramifications of actions. Insurance can provide a valuable option for potential tax obligations or providing cash to some heirs.
Have you written or updated your will?
Many young farmers do not have wills and older farmers are more than likely to have a will written more than 20 years ago. Wills should be updated every 5 years. If you do have a will, does anyone know where to find it?
Have you changed your business structure to include younger generation?
Have you considered what business structure will help you achieve your transition? Today many farms are using LLCs to gradually transfer business ownership over a long period of years.
Have you developed a Business Plan?
Bringing in a family member often requires a change in the scale of the business. Working on a business plan will help both generations realize what is feasible, income required for both parties, and what may likely not work.
Have you considered health care costs and the implications for the farm business?
Statistics indicate elderly people will spend up to 180 days in a health care facility. Yet few have long term care insurance. If health care looks like a major challenge, be sure to discuss Medicaid and long term care implications with your attorney before making major estate planning decisions.