As a farmer, you know the importance of planning and preparation. Your daily work involves carefully considering the needs of your land, crops and animals, and making sure that everything is in place for a successful harvest. But what about your own future and the future of your farm? For farmers, legacy planning is essential, and it’s important to start thinking about it early on to ensure that your farm will continue to thrive and provide for future generations.
The first step in legacy planning is to identify your future goals for the farm. Do you want it to stay in the family and be passed down to your children or other relatives? Or do you want to sell to another farmer or outside entity? You should think about these questions early on so that you have plenty of time to consider the financial aspects of your plan. This involves taking a close look at your current financial situation and that of your farm, including the value of your land and assets and any debts or liabilities that need to be paid off.
Once you’ve identified your goals and assessed your financial situation, it’s time to start working on the details of your legacy plan. This may involve creating a will or trust to outline how your farm will be managed and distributed after your retirement. You may also need to consult with legal, financial and/or trust professionals to help you navigate the process and make sure everything is in order.
If you’re hoping to pass the farm down to your children or other relatives, it’s important to involve them in the planning process. Give them the opportunity to learn about the farm and gain the knowledge and skills they need to run it successfully in the future. Farm succession plans can be very simple or very complex, depending on the size of the farm and family. You may want to consider creating a simple succession plan which outlines the steps that will be taken to transfer ownership of the farm rather than going into the finer details of the succession.
The Key Steps
- Set your goals: Do you want to pass the farm down to your children or sell it to an outside entity? Decide early on so you can make the necessary arrangements.
- Assess your financial situation: Take a close look at your current financial situation and that of your farm, including the value of your land and assets and any debts or liabilities that need to be paid off.
- Create a plan: Farm succession plans normally involve creating a will or trust to outline how your farm will be managed and distributed after your retirement. You might want to consult with legal and financial advisors during this stage to ensure the transition happens smoothly and minimize any tax payments. An experienced trust officer can also offer services so that your hard-earned success will be protected and transferred as you intend.
- Involve the next generation and invest in education: If you’re planning to pass the farm down to your children or other relatives, involve them in the planning process so they can gain the knowledge they need to look after it in the future. Consider investing in training and education for yourself and your family to prepare for the responsibilities of running the farm.
Succession planning is important for the future of any farming business. By preparing now for the transfer of ownership and management, you can help ensure the sustainability of the operation and leave a lasting legacy for your family.
This material is being provided for educational and informational purposes only. D.A. Davidson & Co. is a registered broker-dealer and registered investment adviser that does not provide tax or legal advice. Information contained herein has been obtained by sources we consider reliable, but is not guaranteed and we are not soliciting any action based upon it. Any opinions expressed are based on our interpretation of the data available to us at the time of the original article. These opinions are subject to change at any time without notice. Copyright D.A. Davidson & Co., 2023. All rights reserved. Member FINRA and SIPC.