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Succession Planning for Farm Families

CPAs & Advisors

Alex Wilson
Alex Wilson CPA Principal CPAs & Advisors

Ninety-seven percent of all farms in the United States are family-owned, but the vast majority of those operations do not have a succession plan in place. In today’s agribusiness environment, it is crucial to be proactive in terms of planning, because nothing is guaranteed. Succession planning can be a very emotional process for all the parties involved, but it is crucial to secure the future of both the farm and the individuals who take part.

Family farms face unique challenges

Numerous aspects need to be addressed, and each situation is unique. The elder generation may have a difficult time letting go of the operation they have built, while the younger generation is excited to take over and attempt to further grow the business. It is important to carefully plan the entire process, and to make the succession to the next generation a gradual transition. One way to help ease this process is for a transitioning planning professional to meet with both sides to understand what plans they have in mind, and then create the best plan considering the input of both generations.

During the planning process, many questions should be addressed:

  • Does the senior generation want to continue the farm?
  • Does the next generation want to continue the farming operation?
  • Is there a mutual agreement on what the farm will look like in the future?
  • Does the next generation currently have input on decisions impacting the farm?
  • Is the next generation capable and prepared to assume ownership and management of the farm when the transition occurs?
  • Have you assessed the total value of the farm within the last five years?
  • Have you planned for the impact that an illness or disability may have on the financial strength and operation of the farm?
  • Have you thought about the effect that a marriage or divorce would have on your operation?
  • What kind of income do you need for retirement and healthcare costs, and where will this come from?

Succession planning is a process

Yeo & Yeo can help farm families answer these questions and implement various succession strategies depending on the situation the family presents. One way the firm helps its clients is by partnering with Nationwide and utilizing its Land As Your Legacy® program, which is a comprehensive transition planning tool for farmers and ranchers. The key elements of the program include:

  • Succession planning – determining the best way to transition the farm to the next generation
  • Business planning – ensuring the future of the farm; is it economically viable for the next generation?
  • Risk management – identify risks involved in global markets, weather and natural disasters, investments and the owners’ retirement and business plan, and manage potential issues now
  • Financial independence – safeguarding the exiting generation with enough compensation to live on, as well as enough compensation for the succeeding generation to be stable in taking over operations
  • Estate planning services – creating an organized estate in the event of a family member’s death

It is much more difficult today for children of farmers to take over the family farm. It is no longer advisable to simply plan the estate; a comprehensive succession plan that begins years before is crucial to successfully transitioning the family farm to the next generation.

Yeo & Yeo’s Agribusiness Services Group helps family farms navigate challenges and advance the goal of building a strong legacy for future generations. Please contact us for assistance.

Learn more at an Agribusiness Seminar: Managing Market Risks + Transitioning Your Family Farm

In order to help its agribusiness clients with succession planning, Yeo & Yeo is pleased to host a complimentary breakfast seminar for family farmers on Tuesday, August 30, featuring Mark Gold of Top Third Ag Marketing and Kent Creager of Nationwide. Learn More + Meet the Presenters

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