Regardless of the ultimate outcome – passing the farm to the next generation or selling it – creating a plan for the future requires a lot of groundwork and the help of an estate planning attorney with experience in family farm matters, according to The High Plains/Midwest Ag Journal's article, "Planning for the future of your farm operation."
A business plan can be an important tool in estate and succession planning. This is a roadmap for the farm business, and it gives your business direction, helps you make decisions, and can assist in the future.
Make sure that you have the terminology correct. "Estate planning" deals with the disposition of your assets during your lifetime or after your death, while a succession plan is the transitioning of your farm to the next generation or others to ensure the continuation of the business.
If you don't make a plan for the disposal of your assets, the courts in the state where you live will. And that might not be what you want. You need to create an estate and succession plan for your farm so that you are the one who makes those critical decisions about the distribution of your assets and to guide the continuation of the business.
First, find an experienced estate and succession planning attorney. Remember that not all attorneys are well-versed in estate planning, so find a person who specializes in this complex area. Here are some ideas to produce an effective estate and succession plan that is tailored to your operation.
- Get ready to share. Your estate planning attorney will need to know all of the details of your operation, your investments, and your retirement planning. Be open so that your estate planning attorney can create the best plan to benefit you, your family, and your assets.
- Get ready to open up and talk. Communication is a critical part of the process—one that's often downplayed or overlooked.
- Get ready to include everyone who might be a part of your farm's future. This may drag you out of your comfort zone, but everyone who is involved needs to be included in the discussions and plan. That means your spouse, siblings and heirs. You will need to know who wants to continue to be a part of the farm operation and who does not. Include a frank discussion of their own vision for the farm and don't neglect the details. Include conversations about property on the farm and items in the family home, and be prepared for the unexpected.
Reference: High Plains/Midwest Ag Journal (February 29, 2016) "Planning for the future of your farm operation"