The family farm is something of an institution. It holds a special place in the American dream, and for many families, it’s a generational legacy. Many farm owners dream of passing the family farm on to their heirs as the farm was passed down to them. Or, if it’s the first farm in a family, this is a chance to build a new form of legacy.
It’s no wonder people invest a lot of emotion into the idea of passing on the family farm and the history behind it.
Like estate planning, farm succession planning can be a detailed and emotional procedure. However, farm succession planning can strengthen relationships when the right people plan sensibly. Those you’ve selected to be the stewards of your farm will only benefit from detailed plans that cover all contingencies.
While most estate plans deal simply with property and assets, a farm succession plan formalizes a way to pass on your farm to heirs who will continue running the business as a farm. If you’re planning to leave your farm to your family’s next generation, you’ll want to set it up to succeed.
That’s why a comprehensive farm succession plan is so necessary.
As with any plan involving inheritance and assets, your best option is to work with a qualified estate planning team. As you begin your planning, think about following the following steps.
The sooner you begin planning, the more time you have to make intelligent decisions and select the best people to manage the transition of your farm to your heirs. This is the time to also think about contingency plans to cover various circumstances. You’ll also want to decide who will be managing the business end of things, handling the estate, and overseeing farm operations.
Farm succession plans work best when they take into account all possibilities. For instance, who is responsible for farm operations should you pass away suddenly? What needs to be done now to ensure everyone is prepared to take over the farm on short notice? What are team members’ strengths and weaknesses, and how could they be optimized? What training should be started now?
Ensure everyone involved, from the estate planning team to heirs and managers, are all on the same page regarding the plan and are determined to make it work. Adjust as necessary until you’re confident everyone is moving toward the same goal.
Good communication is key to any effective succession plan. Please talk with your family members about their concerns, assumptions, and own goals. Do this with your estate planning team so they can help answer any questions your family or heirs may have. Discuss everyone’s interests and roles in the transition. Share pertinent business information and discuss how heirs may benefit from a successful farm succession plan.
Any kind of estate planning can get complicated. Go over any issues regarding taxes, trusts, and financial plans with your estate planning team, and ensure those heirs affected by these issues stay informed.
The best way to protect your assets is to have experienced, qualified estate attorneys on your side to advise you on how to conserve your assets for your heirs and your plans for passing on the family farm in as whole condition as possible.
We’ve mentioned a lot about talking. Don’t forget to put your plans in writing as well. Designate your estate attorneys to record all the necessary information and outline formal plans and wills as needed. Outline the details of who inherits what and check that it will happen as you intend.
Hopefully, you will not have to worry about passing your farm on to your heirs for some time. That said, it’s a good idea to review your plan annually and make changes as necessary. Don’t let an outdated plan cause a problem later.
Likewise, plan for your own future. Make sure your finances are in order and continue to stay that way.
We know what to do, but it’s also important to know what not to do if you want your farm succession plan to work. Here are some additional tips to keep in mind.
Planning a family farm succession can be complicated, time-consuming, and sometimes expensive. To have it done right, you want the best team available on your side. That’s why the experienced attorneys at Heban, Murphee & Lewandowski are standing by, ready to help.
Give us a call today if you need help creating a family farm succession plan! (419) 662-3100