Do you have a succession plan in place for your farm? Most businesses have succession plans in place to help ease the transition when the current leadership steps down, but we don’t often hear about farmers making succession plans, and as we know, farms are businesses. A succession plan is a plan identifying internal talent to fill key leadership roles within a company.
A succession plan is a plan identifying internal talent to fill key leadership roles within a company. Family farmers generally have two options when it comes to the longevity and continuance of their farms: passing the farm on to a friend or relative as part of their estate, or selling the farm. Farmers and their families must weigh the pros and cons of each situation. The sale of a farm will give a farmer a lump sum of cash in return for what he has built and maintained. This sum of money will have to be managed. If the choice is to pass the farm on, a suitable person must be identified to assume the role when the current farmer passes on or retires.
Some farms may also have non-relative employees to consider. It must be decided whether or not these employees would stay with the farm in a transfer of ownership. If the hope is that the employees will stay with the farm, there should be some sort of incentive program to keep them on.
An important piece to consider when passing a farm on to a family member after your death is whether or not you are also leaving this heir enough money to pay any estate taxes that may be due.
Retirement planning and estate planning are key to ensuring your financial stability and happiness in retirement and making the right choice for the future of your farm. Contact AgriLegacy with any questions you may have about this important planning.
