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Who will get the Farm, When and How?
You have worked hard to build the farming business into the profitable venture it is today. Years of sweat, toil and personal sacrifice have gone into making your operation grow and provide you and your family with a rewarding income and lifestyle. Here are some questions you may ask yourself as you look five, ten, fifteen years down the road when you will want to step back from the long hours and pressure associated with managing your farm:
Is it too early to begin to plan for retirement and farm transition?
It is never to early to plan! A plan helps give a sense of direction to your future. It helps your farming children see where they fit into the future and gives them incentive to invest their time and energy into the farm when they know what they are working towards. Involving the whole family including non-farming children into your plans create an understanding of why things are being arranged the way they are and can even allow for their input.
Will the end result go exactly as planned?
No, it's not likely that it will, because life presents many changes from year to year, health, marriages, financing, economic conditions, your vision, your child's vision and numerous other events can change the plan. The plan is only the road map, it needs to be reviewed often; perhaps an old road has closed or a new one has opened, adjustments can then be made and you can carry on with a sense of purpose as to where you are going.
How do I go about this process?
You can start with answering some questions:
- Do I have a child/grandchild that is likely to farm? If the answer is yes, then continue asking the questions below. If the answer is no, then you should consider an exit plan.
- When will I want to cut back on the physical side of farming?
- When will I want to cut back on the management aspect of farming?
- Does my successor have the capability to manage the farm?
- Are the marriages or relationships of the concerned parties stable?
- How much will I/we require after retiring. Project retirement income from all off farm sources, then how much additional cash will I need from the farm?
- Will I finance the buyout, or will my child have to borrow to buy me out?
- Can the farm in its current form support my child's family and also support my/our retirement? If not, what steps need to be taken to allow the transition to happen?
- How will transferring the farm affect the non farming children? Do I have non farming assets that can be willed to them to make my estate equitable even though it may not be equal to all children?
- Are there tools and advisors out there to help me plan this transition?
Asking yourself these questions can create thoughts, ideas and even more questions that are necessary in developing a plan. Planning of this nature doesn't happen just in one session, but to plan properly will require time and family consultation. Wheatland Accounting would be pleased to discuss your succession planning needs and help guide you through the development of a plan that will best accommodate your goals and that of your children in a tax efficient manner.