When it comes to saving the family farm for the next generation, the importance of a proper estate plan can't be emphasized enough. Certainly every farmer knows the importance of a business plan but every plan should include succession planning for the business.
What I have attempted to create is a roadmap for the farm business, that gives your business direction, helps you make decisions, and can assist in the future. First, let's make sure we have the terminology correct. "Estate planning" deals with the disposition of your assets during your lifetime or after your death, while a succession plan is the transitioning of your farm to the next generation or others to ensure the continuation of the business.
If you don't make a plan for the disposal of your assets, the courts in the state where you live has a plan, likely much more onerous than any you would devise. You need to create an estate and succession plan for your farm so that you are the one who makes those critical decisions about the distribution of your assets and to guide the continuation of the business.
Find an experienced estate and succession planning attorney. Remember that not all attorneys are well-versed in estate planning, so find a person who specializes in this complex area. Here are some ideas to produce an effective estate and succession plan that is tailored to your operation.
Here are some helpful tips on creating an estate and succession plan for your farming operation.
- Get ready to share. Your estate planning attorney will need to know all of the details of your operation, your investments, and your retirement planning. Be open so that your estate planning attorney can create the best plan to benefit you, your family, and your assets.
- Get ready to open up and talk. Communication is a critical part of the process—one that's often downplayed or overlooked.
- Get ready to involve the people who are a part of your operation. Make sure to include everyone who's involved in the operation of the farm business. This includes your spouse, your siblings, and/or heirs. They need to be consulted regarding whether they want to continue the farm business, their interest in particular family items, and any other wishes or concerns.
Reference: High Plains/Midwest Ag Journal (February 29, 2016) "Planning for the future of your farm operation"