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The importance of succession planning for your farm

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In Northeast Kansas, hay season is in full swing. Brome seed season is just around the corner. Silage chopping is on the horizon. Farmers everywhere are running long hours, working while the sun shines. Preparing and prepping for winter and feeding season.

As you spend the long hours in the cabs, I’d really love for you to prepare for something else — what’s going to happen to your farm when you are gone and what you are doing to prep for that now.

I grew up with two older sisters on a family farm and married in to another one. Both my parents and in-laws have clear-cut plans that we have all been informed of.

» Related: Five steps for successful farm succession planning

My husband and I are Millennials. We have a lot more sweat equity than actual dollars to contribute to the farm. We’re blessed to be able to have a family operation to start on. My husband loves what we do. He would do it whether or not the land was coming to him. He loves improving the land. He loves learning new things. As his wife who works right alongside him, I appreciate the assurance that our work is building something for our future.

It can be an uncomfortable conversation, but if you are the matriarch of your farm, please have it. You have spent your entire life building what you have — make sure it’s as protected as it can be when you go.

A few thoughts to think through to get started:

  • Do you want to die in the tractor seat or do you want retirement years?
  • If you want retirement, how are you financing it? (Selling land, investments, rent, profit sharing, etc.)
  • If you want retirement, who is taking over?
  • Have you considered long-term care insurance so the farm doesn’t have to be sold to finance your later years?
  • If you don’t have family interested in joining the operation, how can you connect with other young producers who might be interested? Or do you just want to sell the land/equipment outright?
  • What did you work your whole life for?
  • Should you consider a trust or start gifting land to your beneficiaries to ease tax burdens?
  • Fair isn’t always equal. Are you going to divide evenly between your children or give the farming children more?

It’s not easy thinking about making these decisions. I know you simply want to farm and run your operation, but part of doing that is these responsibilities.

Image courtesy of Before The Plate

Now what about those of us that are stepping into the farm? What should we be thinking? What should we be doing?

A few thoughts for the younger generation to ponder:

  • If there is no plan in place, how am I preparing for the tax burdens/buying the land and equipment when matriarch is gone?
  • Am I OK with working for an operation that I’m not sure what’s going to happen? (Siblings, taxes, ownership, etc)
  • How can I respectfully have a conversation with the matriarch about succession planning?
  • Is working with multi-generational family really what you want to do? Or do you deem it the only way to farm?

Here’s the thing … we are going to die. It doesn’t take a very big farm to be talking millions of dollars involved. Both my side of the family and my husband Matt’s side have family members not speaking because of agriculture and things that happened. I’m also certain we aren’t the only ones like that. It’s sad. People come out of the woodwork when that kind of money is involved.

I get it, we’re super blessed to have an operation to walk into. But, I also know that the reverse is true. Because we’re here, my in-laws have more freedom to enjoy other things. Having a plan and making sure everybody knows the plan before the matriarch passes, has a much better chance of harmony for those left behind.

We are on both sides of the children conundrum. On Matt’s side, he is the only child involved on the farm. On my side, my sister is the only one actively involved in running the family operation. So we are both the only farming child and a child that has left the farm.

The bottom line is, the matriarch has worked their entire life, usually, for what is there. They have complete power over what happens. They get to choose. Sometimes that isn’t fair. Sometimes we don’t know why they did it. But the choice is solely theirs. The assurance I have both on my husband’s operation and my own family’s operation is that we know. We have had conversations with both our parents about their wishes, and that brings peace to both them and us.

Succession resources

OK, you’re ready to start your plan. Where to go? Many extension offices are a good first resource and can point you in the right direction. If you have a trusted financial advisor, talk with them.

Ultimately, most plans need a lawyer to make sure all the i’s are dotted at t’s crossed. Make sure you’re comfortable with the lawyer who you choose. Good luck and happy planning!

 

Kelsey Pagel is a Kansas farmer. She grew up on a cow/calf and row crop operation and married in to another. Kelsey and her Forever (Matt) farm and ranch with his family where they are living their dream and loving most of the moments.

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