Prioritize What Is Important To You in Farm Succession, Transition

Agricultural producers need to consider an assortment of factors in farmland succession and transition, a Southeast Nebraska audience was informed.
“Do you want to have control of your assets after you’re gone?” Anastasia Meyer asked. She is an agricultural economist with the University of Nebraska-Lincoln (UNL) Center for Agricultural Profitability.
Meyer related you need to begin thinking about succession because of several circumstances:
--98 percent of farms are family owned and operated.
--Active operators or retired farmers own 75 percent of farmland in the United States.
--About half of operations have no succession plans or outdated ones.
--Farms and other assets will transfer, with or without a plan.
Producers Asked About Retirement Plans
UNL representatives asked why farmers are retiring at a later age or only semi-retiring. Respondents indicated these are either important or very important:
--Having a difficult time giving up control of farm, 75 percent.
--Modern equipment allowing them to farm longer, 69 percent.
--Relating retirement to their own mortality, 66 percent.
--Do not have a successor, 55 percent.
--Do not know what else they would do, 54 percent.
Why Farmers Do Not Plan For Transition
Meyer noted the top motive is fearing that if they do something it will be wrong in the future.
Other answers included: too complicated, not liking to plan calling it mental work and facing their own mortality.
“Your children do not owe you anything. You do not owe your children anything except honesty,” the economist indicated.
Transition Planning Components
“You need to prioritize what is important to you,” she said.
Business planning: Is the business financially viable, income/compensation expectations for each family unit, future of the operation, how are you teaching the next generation how to manage the business, what are the triggering events within your plan, and what structures or agreements do you have in place to help transition the operation to the next generation.
“Have your leases in writing,” Meyer stated.
Estate planning: She stated anyone more than 18 years of age absolutely needs a will, power of attorney, power of attorney for healthcare and living will or healthcare directive. The economist continued you may need or want a trust, funeral instructions and bequests of personal property.
Succession planning: There are several steps--compiling an inventory, talking with your children, having family meetings, determine what do you own or owe and having a professional implement a plan. It needs to be reviewed periodically as your situation changes. It is suggested you discuss your plan during major life events such as birth, death or divorce or every three to five years.
“Sunset” planning: Consider how much money you currently draw from the farm or ranch; retirement plans; and are you ready, willing and able to communicate your financial needs during transition and retirement. 
Stress in Succession Planning
More than half of participants encountered stress over how assets were divided, Meyer noted. That involved business and personal risk, sibling harmony, emotions and treating assets strictly as inheritance and not as business assets.
Listening, and showing empathy and concern are recommended, she said.
Entailed in an article in the Dec. 18 Observer was critical financial considerations of farmland succession and transition.