Like many folks who own a business, farm owners care deeply about their operations. You plan that your agribusiness will thrive while you’re at the helm—and well beyond your lifetime. And for most farmers, the long-term plan includes having family involved either in direct operations and as beneficiaries of the assets. But as we all know, life throws curveballs when we least expect them. Unfortunately, events like unexpected disabilities, divorce, premature deaths, or family squabbles can put a wrench in even the best operations.
So how do you plan for a successful and efficient farm transition?
As with any family business transition, having a solid, written plan in place can make all the difference. These plans often address questions like:
- Who will be in charge after I pass away?
- How will my assets be divided up?
- What happens if my farming partner dies?
- How could divorce in the family impact things?
- How can I ensure the long-term financial health of my farm?
There’s no one-size-fits-all approach with farm succession. Because each farm and family are unique, the final plan should be personalized to meet your specific needs and desires. And the key to ensuring your wishes are carried out is to start planning earlier rather than later.
Just as running a farm means lots of moving parts and people, creating a robust succession plan has many facets. That’s why it’s important to rally an experienced legal team around you. Together you want to look at the big picture, addressing everything from business and financial strategies to estate planning and taxes, legal documents to even family relationships. You need a customized plan in place that holistically examines best- and worst-case scenarios and ensures your family and legacy are protected for generations to come. Common issues to consider during farm succession planning include:
- Family continuity
- Death or divorce of a family member
- Wills and/or trusts
- Transfer of ownership documents
- Corporate structures
- Spouses of family members who own shares
- Cash-flow matters
- The effects of bankruptcy in the family
- Operating or buy-sell agreements
- Life insurance
- FSA entity planning
- Gift and estate taxes
- Health insurance and Medicaid planning
- Strategies for maximizing income
- Designating ownership in the event of divorce or death
- Non-family members who are key employees
- Operational responsibilities
The Power of Communication
Successful farm succession starts with open, honest, and ongoing communication. At BB&C, we always encourage our farm clients to have regular conversations with family and other key individuals about these matters. We even help our clients plan for and navigate these types of discussions as needed. Family dynamics can be tricky to navigate, but taking the time now for transparent conversations can prevent big heartaches in the future. It’s also important to regularly update family members as plans and situations change. The goal is to avoid any misunderstandings or unwanted family drama down the road.
With so many factors to consider, farm succession planning can feel overwhelming. But with the right team on your side, you can secure the future of your farm and provide for your loved ones. After all, farm succession is about more than just dollars and cents; it’s about protecting your family legacy. With decades of experience coming alongside Hoosier farmers, we know how to help families like yours with farm succession plans that work. Reach out to Kyle Mandeville at 765-742-9068 to see how we can help.
The content of this blog is intended to be general and informational in nature. It is advertising material and is not intended to be, nor is it, legal advice to or for any particular person, case, or circumstance. Each situation is different, and you should consult an attorney if you have any questions about your situation.