Farm succession planning is often a topic that many shy away from. Let’s be honest, it’s a difficult topic to think about and discuss with your family members. The process itself can seem daunting, but regardless of the complexity it’s an important piece to ensure your legacy can continue for future generations. It not only takes into account how assets will be divided but it helps prepare your heir(s) to become the operators. We debunk five common farm succession planning myths below.
Myth #1: Retirement is too far away.
It’s never too early to start planning for the future of the family farm or ranch. Getting started early can help alleviate future stresses – financial, legal, emotional, family dynamics – of transferring your farm or ranch. The best time to start planning is now when you’re years away from handing over the reins.
Myth #2: My will is good enough.
A will is really only effective at your passing. A business succession plan is much more tailored to how you’ll transition your farm or ranch to the next generation while you’re still living. It takes various things into account like what you want your involvement to be in the business, how assets will be divided between non-farm heirs and farm heirs and how you’ll receive income during retirement.
Myth #3: I don’t own enough assets.
No matter the size of your operation, if your goal is to keep your farm or ranch in the family for future generations; it’s important to plan out the transition.
Myth #4: I have to distribute my assets evenly among my children.
Fair doesn’t always mean equal especially when you may have non-farming heirs. Many factors go into deciding how to split assets among your heirs. In some scenarios, farm assets like land, equipment and livestock are given to the farming heirs, while non-farm assets like retirement accounts, savings, investments, life insurance benefits are left to those not on the farm.
Myth #5: I can do it all on my own.
Because of its complexity, succession planning is not a simple, DIY or one-size-fits-all process. It’s essential to have a team of professional resources who can help provide advice on best practices, tailor recommendations to your unique situation and put all the paperwork in place to help ensure a smooth transition. Your local Farm Bureau agent can help discuss the business succession process and help you learn more about preparing your family farm ranch for the next generation.