Maybe you already have a farm succession plan in place, or maybe you haven't started yet. Either way, it's time to start - or continue - thinking about what issues you still need to solve, or what areas of your existing plan you need to revisit.
Did you know that retiring farm business owners should allow the owner-to-be to move into management and decision-making within six years of entering the business? Farms that fail to do so are twice as likely to have an unsuccessful business transition and are less profitable. Download our free report: Farm succession planning: Customizing a farm estate plan below.
What's more, the optimal time for ownership and management of a business is 30 to 35 years. Owners and managers who don't select an heir or decide how to divide assets through farm succession planning could run into the trap of continuing to do "business as usual" without changing for the times.
Avoid the pitfalls of being caught without a plan. When you download your free copy of Farm succession planning: Customizing a farm estate plan, you will learn:
The first part of transition is lifestyle planning
Creating a free-standing retirement plan can ensure the farm business only must support one family instead of two. This includes creating a cash reserve and purchasing sufficient life insurance. Retiring farmers also must develop a timeline for claiming social security benefits, and consider including long-term healthcare coverage as part of the lifestyle section in the farm estate plan.
Next, move on to legacy planning
The legacy portion of farm succession planning requires tough love and tough decisions. In this section, retiring farmers will appoint an heir apparent through thoughtful consideration of the candidate's skills and priorities. Retirees must also continue to groom their successor by providing training and focused discussion on the future of the farm.
Don't forget these legal considerations
The legal and tax considerations of farm estate plans are where many farmers may become nervous. Here, legal professionals are a big help – but thinking ahead about how to treat an heir's off-farm siblings or how much capital is needed to make the farm transition keeps you a step ahead. There are also a handful of legal tools, like deeds and trusts, which will require consideration.
You've spent your whole life building and improving the farm business, but what happens when you're gone? Will a family member take over? How about an in-law, cousin or trusted employee? These questions can be answered through comprehensive farm succession planning.
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