A family farm comes with distinct estate planning considerations, including succession planning. When deciding to retire, farm owners must think about their intent for the future of their business while creating a legacy for children and grandchildren.
Consider these factors when beginning the process of estate and succession planning for a family farm.
Create a comprehensive operations plan
If you have not already documented the daily operations of your farm somewhere other than your own store of knowledge, the process of doing so will inform your estate and succession plan. Have a clear understanding of each piece of the operational puzzle to strategize about who can take over.
Begin the conversation
If you have heirs who may want to step into your shoes, start talking about what that will actually look like. Some questions to pose include:
- How many heirs do I have?
- Do all, some or none of my intended heirs want to take over farm operations?
- If multiple heirs have an interest in running the farm, can they collaborate well with one other?
- What type of training does the succession team require?
If none of your family members really want to run the farm when you retire, you must think about selling all or part of the business.
Build an advisory team
The larger your farm, the more extensive your estate and succession planning process. You will likely need a professional valuation of the farm, property, real estate, crops, livestock, equipment and the business itself. You must also learn about the tax implications of your plan.
Allowing plenty of time for farm succession facilitates a smooth transition.