Will Your Farm Successfully Transition to the Next Generation?
When the calendar turns over to the new year, presentation season gets underway for our office. With many farmers having some schedule flexibility, the winter months provide an excellent opportunity for co-ops, lenders and other organizations to host various seminars and meetings. As a result, from January through March, my associates, Robert and Kelly and I get the opportunity to travel across Ohio and present to hundreds of farmers.
When organizations ask us to attend meetings, 80 percent of the time we end up presenting on one topic: farm succession planning. This is for good reason, because many farmers and farm families still cannot answer this question: Will our farm successfully transition to the next generation? In fact, I would submit that today’s single greatest threat to family farms is not low farm income or regulation, it is the inability to successfully transition the farm from one generation to the next.
Having partnered with AgCredit for many years, our office knows this organization recognizes the importance of farm succession planning. This year, AgCredit has committed more resources to the succession planning discussion by scheduling a series of seminars. For this article, I don’t want talk about the nuts and bolts of succession planning; rather, I want to implore you to make 2018 the year your plan is completed.
Know YOUR Goals
Farm succession planning is a complex process with many different areas to consider. Often, farmers get bogged down in the legal or financial nuts and bolts and miss the bigger picture. The primary objective for farm succession planning is accomplishing the goals you have set for your family and farm.
Succession planning goals can be relatively simple. Some common goals include: protecting farmland, minimizing taxes, passing a viable farm operation, protecting against in-laws or second marriages, maintaining privacy, reducing the chance of conflict or achieving an equal distribution among children. As you can see, these are not complex objectives. In short, don’t become overwhelmed by the details of farm succession planning, keep looking at the bigger picture by focusing on your goals. Leave the details to your professional team.
It Takes a Team
My last Leader article highlighted the number of people involved with the succession planning process. Attorneys, accountants, banks/lenders, insurance agents, financial advisers and others all have a part to play. I want to reiterate one key point from the article: surround yourself with professionals who are familiar with farm succession planning and can help you complete the job. When selecting these professionals for your plan, be sure to do some due diligence to ensure they are up to the task.
There is another key point to keep in mind when working with your succession planning team. These professionals work for YOU. Even though each person brings a certain expertise to the table, ultimately you dictate the work each of them will perform. You should feel open to ask questions of each person and change direction if you are not satisfied with the outcome. Most importantly, make sure you fully understand your plan when it is complete.
Succession Planning=Risk Management
Take a minute and think about your existing operation. How much work did it take to reach its current size? How many family members, both current and past, were involved in operating the farm? How many risks did you take to expand the operation? Each farm and farm family has a rich history, and it has often involved tons of hard work, generations of family members and a variety of risks. Along the way there were numerous opportunities for everything to fall apart, but it didn’t.
I would submit that succession planning is a form of risk management to ensure your farm will survive. Would you be willing to risk the survival of your farm, meaning all of the hard work was in vain, by not adopting a succession plan? My guess is that most readers would answer “no” to this question. Your farms are your most cherished assets, so why risk its dissolution by failing to implement a plan? If you truly value risk minimization for your farm, then succession planning must be a part of your mindset.
So, do you have a plan in place to successfully transition to the next generation? If you have already completed a plan with your attorney, excellent. Our only suggestion is to review the plan every five years to make sure it still works. After all, things can change in a five-year window.
If you have not undergone the succession planning process, I would encourage you to commit to completing the task in 2018. If you are looking for a starting point, look no further than AgCredit’s succession planning seminars. These seminars will feature succession planning experts who can help you overcome the challenges facing your family. With access to resources like this, the time to ensure your farm makes it to the next generation is now.