Studies show that roughly 89 percent of farmers today do not have a transition in place, which makes it difficult for the next generation to succeed. ASA partners with several quality providers to assist you in easing the transition to the next generation and ensuring long-term success for your operation. ASA will evaluate your farm and your specific situation to provide a recommendation for the best transition plan for you.
- Succession Planning. The successful transition of your business to the next generation
- Business Planning. Your strategy for profitability now and in the future
- Risk Management. Identifying and preparing for risks to your operation, including health insurance, long-term care and property and casualty insurance
- Financial Independence. Ensuring your financial independence from the farm operation after retirement and mentorship training for the next generation
- Estate Planning. How you would like your assets distributed and liabilities paid
While estate plans concentrate on tax liabilities and the various ways to lessen the tax burdens, transition plans focus on the future of the farm. They are an integral part of an estate farm plan. A farm transition plan can include various pieces such as transferring or selling ownership to another person, liquidating farm assets such as auctioning equipment and livestock or selling land, renting or leasing your land or equipment, and selling or contracting the property.
Make sure to concentrate on the desired final outcomes of the succession. Ask yourself what do my spouse and I envision for the future of the farm? Do I want to stay involved with the operation on a smaller scale? What kind of income might I need for retirement or health care costs? If you have a family member who could and may want to take over the operation, you should be comfortable that they have the knowledge and skills to run it profitably.
Transition plans can often fail due to various risks that were not considered during the planning stages. These include:
- Inadequate cash flow
- Liquidation of some assets to provide for retirement
- Poor farm estate planning
- Unresolved issues between family members or a successor who’s not prepared to lead and manage the farm business
When developing a transition plan, it is important to gather a team of qualified professionals who do not have a stake in the final decisions. These will include an insurance agent, a financial or estate planner, a moderator or arbitrator, a banker, an accountant, and an attorney. These professionals can help you to make unbiased decisions when it comes to your farm and business.
Talking with your family about succession planning for your farm can be difficult, and it can be hard to think about selling your farm or handing over control to others. However, having a solid transition plan can help to ensure that you and your family’s wishes are met and that emotional stress is minimized.
Give Agri-Services Agency a call at 1-877-466-9089 to discuss your options and start your transition planning today!