A family I recently worked with says they’ve found peace knowing their farm now has a clear succession plan. In fact, it seems the process brought the entire family together which is something they will be especially thankful for this holiday season.

This leads me into the succession planning quandary I often think about. I have yet to meet a farmer who doesn’t want to see their farm stay in the family. Yet, for some this is a difficult subject to talk about so it’s easier to defer the conversations for later. For others, they may be ready and willing, but just don’t know how or where to start.

As time goes by, so has the average age of farmers and landowners which is now the oldest in history. And, what’s startling is the fact surveys such as the one below have found a high percentage in this demographic do not have a written succession plan in place.

Source: FarmTransfers survey

A random sampling of Iowa farmers in 2019 found 66% of respondents do not have a formal succession plan. The study reaffirmed similar results found from other states and countries around the globe.

We call this the great “farm wealth” transfer looming ahead as a record amount of wealth changes hands from one generation to the next. This makes for a dangerous recipe in my opinion, a perfect storm if you will ahead in the world of farm transitions.

If you find yourself stuck or unsure where to start, consider asking yourself these questions to help get the conversation started:

In a perfect world, what would you like to see happen?

This may sound morbid, but I like to start with the end in mind. Then, we can brainstorm various strategies to help you get there. What are your top priorities. Is it more important to keep the farm in the family or to treat everyone perfectly equal. For those who are unsure, ask yourself these five W’s:

Who’s who in your family?

Who are passive owners versus active managers. Who should own what assets such as the operating assets versus the long-term assets like farmland. Who in your family are actually landowners.

What are the assets to be divided?

Are there some assets better divided versus others better kept together. How will it affect the farm is the land base is divided. If assets are divided, are there assurances in place so the farm has access to them.

Where and when will you begin the process?

Generally, our legal community suggests waiting and transfer assets at your death. This preserves the “step-up” in basis of those assets as they pass through your estate. However, consider the strategies to more proactively get the kids involved now. And, don’t forget about transfer of leadership, management, and labor.

What is your why?

This proved to be powerful for the family above as the story of the roots of the family farm was shared along with the ups and downs. For them the process was about carrying forward and preserving a legacy. Communicating your why is a powerful exercise.

What could happen if you do nothing?

Doing nothing is always an option. And, I like to ask what could happen if you do nothing. More times than not this quickly leads to a decision that doing nothing is not an option, and helps create momentum for taking next steps.

Yes, it’s an interesting quandary the business of farm succession planning. Unfortunately, some will allow time and appreciated farm values to pass they and their estate plan by. This deferral mentality can subject the future of the farm to the emotions of greed, hope, or fear if a clear succession plan is not communicated otherwise.

What’s ironic to me is those I’ve worked who take these steps and communicate their succession plan typically leads to a feeling of gratitude and increased harmony in the family. And for many, family is just as important as the farm. 

Downey has been helping farmers and landowners for the last 23 years with their family farm transition, estate planning, leasing strategies, and general farm advising. He is the co-owner of Next Gen Ag Advocates and an associate of Farm Financial Strategies. Reach Mike at [email protected].

Learn more about navigating multi-generation operations at the Farm Futures Business Summit in Coralville, IA, Jan. 9-11, 2024.