One of the biggest issues facing a farmer/rancher is how to manage the farm/ranch after retirement, disability or death. Most do not have a plan for the orderly succession of the management. Failure to plan may prevent you from retiring, break up the family farm, cause hardship for your spouse and/or cause siblings to fight.
Issues in Farm Transition, Succession & Estate Planning include:
- Preparing the Family and the Business
- Confronting issues of transition and control
- Treatment of heirs including financial assistance
- Developing the transition/success/plan outline & gathering documents and information
- Choosing the proper estate planning tools & getting the tools in place
Succession plans typically include the following:
- Determine the practicallity of transferring your agribusiness. Are your operations viable for a transfer to make sense? Would it be better to simply lease your land to another farmer (e.g. your child)
- Chose a successor. Is there a family member, friend or employ who is willing and able to assume the responsibilies of the operation?
- Begin transferring the ownership and management to the successor.
- Finalize the transfer of ownership and management responsibilities.
The process is usually stretched over several years, especially when the plan is made early. A moderately paced transition will ensure the best chance for success and stability of the operation.
The following are suggestions for making a succession plan:
- Set a target date for the final day as the primary decision-maker. Start shifing responsibilities ahead of time so you can oversee the transition while still on the farm.
- Assist in the training and education of your successors along the way. Fully inform them of your daily work because you do necessary things that are not obvious to others.
- Hold regular meetings to review finances, debt and revenue updates, workload expectations, work schedules, employee issues, equipment, etc.
- Work with professional advisors in the transfer of assets, debt restructuring, business structures, and other financial/legal issues.
- Consider having a buy-out agreement in place if multiple successors are involved.
- Consider off-farm family members’ expectations and needs. A buy-out agreement of off-farm heir’s interests may be appropriate.