Succession planning is not just about the future of your farm or ranch; it’s a blueprint to preserve your agricultural legacy and protect the heirs who will inherit it. Despite the importance of having a succession plan, research conducted at Iowa State University found that only half of farmers had such a plan.
Because of its complex nature, succession planning is not a DIY process. Instead, it’s essential to have a team of resources who can advise you on best practices and put all of the paperwork in place to ensure a smooth transition.
Your succession planning team should include these nine people:
The stakeholders in the current operation need to be involved in all of the decisions relating to the future of the farm or ranch. Be sure to include your spouse, siblings and business partners who have financial interests in the operation.
Your heirs are an essential part of the succession planning team. Leaving heirs out of the process could mean making errors about who wants to take over the business and failing to incorporate their vision for how it will operate after you retire.
Different succession strategies have different financial and tax implications. An accountant familiar with farm and ranch businesses and succession planning can offer valuable advice about the best way to handle the transaction.
In addition to drawing up the necessary paperwork to transfer ownership, a lawyer can provide invaluable advice about the legal implications of various succession strategies. Succession is also an excellent time to update (or create) your estate planning documents.
You’ll need advice about how different kinds of insurance, including life and disability policies, will factor into the overall succession plan.
Succession is a financial transaction, and your lender can explain the financing options as well as the funds that are needed to transfer ownership of the land and/or equipment.
Before making decisions about transferring assets, investing funds from the sale of the farm, or dealing with debt, consult a financial planner. Your financial planner can also provide advice on living well in retirement.
Succession is a major decision. Farm consultants can help you evaluate the options, devise a succession plan and resolve conflicts within the family to ensure a smooth transition.
FSA farm payment limit eligibility advisor:
Changing the business structure of the farm, including transferring ownership to a successor, can impact your Farm Service Agency payment eligibility and limitations. An advisor who is knowledgeable about FSA payment limit eligibility rules is an essential member of your succession planning team.