Imagine this scenario: Son has been farming with Dad for years when Dad dies unexpectedly without an estate plan in place. Without an estate plan, the state laws dictate who gets the land and the farm operation, likely leaving future of the farm in question. Now add to this scenario the fact that the farmer had two other kids besides the farming son, who live and work off the farm. Now we potentially have the difficult, but common, scenario that son wants to farm and can’t afford to buy out his siblings who inherit under the law. Even if the farmer’s wife is still alive, they may have missed a valuable planning opportunity to provide income for the widow, minimize both estate and income taxes, and protect the farm for future generations. Scenarios like this leave families at odds and under financial strain at an already difficult time.

A common theme with the farmers we work closely with every day is that they want to see their children and grandchildren one day farm the land that they and their parents have farmed. With this dream comes the difficult conversation of farm succession planning. Succession planning means many different things: bringing the next generation into the business, creating a structure to protect the assets from taxes or care costs as you age, and ensuring your wishes will be honored after your death. It is easiest to break it down into phases.

Phase One: Inventory All Assets. Assets include real property owned individually or with others, personal assets, farm assets, business assets, or other investments. Make a list of these assets and their approximate value. When compiling your list, you should confirm who owns that asset during life and who receives that asset upon your death. Seeing the whole financial picture will help clarify opportunities and issues for the plan.

Phase Two: Map Your Desired Outcome and Estate Plan Goals. When mapping out your goals, carefully consider your retirement goals, your succession plan, and your inheritance goals. It is essential to envision how you see your farm running in the future and also think through the role of children off the farm in your overall estate plan. A key component in developing the succession plan is making sure you can live comfortably and that your family will be able to financially continue the farm. Seeing your goals on paper will help to accomplish those goals.

Phase Three: Work with a Team of Expert Advisors. A team of expert advisors will give you access to the advanced tools to best achieve your goals. Farm succession and estate planning involve a multitude of legal areas: business, tax, real estate, and estate planning, so it’s important to work with an attorney that understands succession planning, as well as the Ag industry. The right succession plan can ensure you reap the benefits of your years of hard work, while giving your family an opportunity to continue farming into the future.