Succession and estate planning are topics that will likely be addressed at many American farms. Almost all of the farms in the U.S. are family farms, according to the U.S. Department of Agriculture. They also contribute just shy of 90 percent of the produce grown in the U.S.
These conversations can be difficult, and, in some cases, emotional. However, they are necessary for the health of the farm, as well as the minds of the family members involved. Families need to know what will happen when the leaders and decision-makers of these farms either retire or pass away. Lack of direction in these potentially uncertain times can make moving forward extremely difficult.
Bring in a third party
In the world of family farms, it can be incredibly difficult to distinguish family from farm. When many relatives associate the family legacy with the success of the farm, stakes are high for a transition to go smoothly. And when there’s that much pressure on a series of objectives and actions, it’s not uncommon for everyone to bring their own, diverging viewpoints on how things should be handled. A room of 10 people could be filled with 10 conflicting opinions.
To ease the tension and help everyone get on the same page, Farming Life suggested bringing in a knowledgeable third party who has experience in family farm transitions and estate planning. This person will be able to listen to each family member’s opinions from a neutral standpoint and make recommendations on how to move forward. Since the third party isn’t tied into the business at all, he or she can look at the situation completely objectively.
Start discussions early
Children who grow up on a family farm likely have been doing farm-related chores for the majority of their lives. It’s not unheard of for a child to picture him or herself being the boss who runs the farm one day. However, it’s important to remember that, just because you’re blood, that doesn’t mean you’re necessarily best suited to take over.
On Pasture pointed out that making these decisions isn’t easy, and should take many years to work out. A few things that help along the way are:
- The children getting education and life experience outside the farm, such as through college or the military.
- The children work on the farm as an average laborer so they can get a good feel for what full-time farm life is like. This way, there won’t be any surprises.
- The parents provide a clear path to ownership, so children aren’t left in the dark about when or if they’ll inherit the farm one day.
Planning out who will inherit the farm and all its responsibilities is hardly an easy discussion to have.
While there are many examples of successful transitions between one generation and another, there are also plenty of times when lack of communication or direction causes great strife between family members. The farm as a business ends up with the short end of the stick.
Don’t neglect to give your family a clear roadmap; careful future planning is never a bad thing.
Our Trust Services department can help manage or assist with transferring your family’s farm.