October 27, 2023
Ohio State University’s Agricultural & Resource Law Program, Iowa State University's Center for Agricultural Law & Taxation, and the National Agricultural Law Center are partnering to create a new association of professionals who advise farmers and ranchers on succession and transition planning.
The inaugural conference was held in Des Moines in August, which brought together 240 attorneys, tax specialists, and other farm transition experts for learning, networking, and idea sharing. I was honored to kick off the conference with a “boots on the ground” perspective for the primary issues facing farm transition planners.
I’m not going to lie; I was nervous, and it took some guts as I looked over a room full of seasoned professionals. I opened the conference by sharing a common question I hear out in the country from farmers:
“Mike: Do you know of any good attorney’s or CPA’s who specialize in agriculture?”
“And preferably, younger ones!?”
Age of practitioners
I write a lot about the age of farmers and landowners. But this is an issue in the rural practitioner world too, and the truth is many retiring farmers I work with are outliving their respected advisors. The problem? Many legal and tax professionals have not identified a successor.
I polled the audience and asked how many have a succession plan in place. Of those attending, only about one-third raised their hands. One attorney shared she is 1 of 6 attorneys left in her county working with farmers. She said there were 16 or 17 just 5 years ago.
At one of the breaks, I had a conversation with a farm appraiser and he shared common concerns. He said his company is having a difficult time finding college graduates or others from the ag industry who want to enter his profession.
Think about farm CPAs and other tax professionals. I’ve always respected and admired their time commitment during the busy tax season, working long hours, chained to a desk, talking about taxes every day. I can appreciate how this may make it difficult to entice bringing in new partners.
Perhaps there are some parallels here with farming and other trends occurring in the ag industry. It’s no secret a large percentage of U.S. agriculture is owned and operated by an older demographic. Farming can be challenging at times but it’s important to understand this is an issue with the legal and tax advisors you work with, as well.
Succession planning a new craze
Forgive my poor analogy to Kenny Chesney’s song, “She think’s my tractor is sexy.” But as we look ahead, succession planning could become a popular fad as baby boomers currently hold half of our nation’s $140 trillion in wealth. It is estimated millennials will hold 5 times as much wealth by 2030. This has been coined the “Great Wealth Transfer.”
A record amount of wealth will transfer in the next 10 to 15 years, so beware of cookie cutter estate plans that may do nothing to address the long-term goals for you and your family farm. Sexy-sounding estate and succession planning programs have come and gone, and we will likely see more enter the marketplace in the future.
As you meet with a new advisor, ask yourself: Are they doing this with good intentions? Do they understand the market? Or, are they overcharging and underdelivering?
Other common parallels
I was struck by the fact almost every presenter during the two-day conference had some type of personal experience which led them to working with family farm transitions, including me. You can tell the ones who have a true passion for it, just like in farming.
Looking back, I wish I asked a follow up question to the one-third who said they have a succession plan in place: “Does the plan cash flow?”
More and more farm businesses will transition to non-family successors in the future just like what will occur with ag consulting, legal, and tax practices. However, those entering and exiting the business will need to find a delicate balance between the value of the equity being transferred and the financial feasibility for buying it and maintaining a viable business moving forward.
Lastly, there was overwhelming acknowledgment that rural practitioners need to do a better job working together with more collaboration, idea sharing, and networking. Is this yet another parallel to the farming community and ag industry in general? I’ll let you be the judge of that.
If you know of a respected advisor who may have interest in the new association of farm transition planners, please ask them to visit here.
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].
About the Author(s)
You May Also Like
Current Conditions for
Enter a zip code to see the weather conditions for a different location.
USDA exports – Unknown buys soybeans, November 28, 2023Jan 19, 2023
Weather hinders record South American exportsNov 28, 2023
Create a winning 2024 grain marketing planNov 28, 2023
Corn, soybeans bounce following Monday’s lossesJan 19, 2023