Wallaces Farmer

10 reasons why early planning leads to succession success10 reasons why early planning leads to succession success

Planning for changes such as death, disability, retirement and farm succession isn’t easy. Starting early makes these transitions easier.

Erin Herbold-Swalwell

January 27, 2025

4 Min Read
Farmer observes cattle grazing in a field
PONDERING TIME: It has taken a lifetime of work to build your farming operation. Planning now for life events such as death, disability and retirement can ease the transfer of your farm to the next generation. Gil Gullickson

I recently attended an estate- and succession-planning conference. While I listened to the interesting speakers, it hit me that the overarching theme was that we all would benefit greatly from proactive business planning. 

Planning early for life changes such as death, retirement, disability and transferring the farm business to the next generation can make a big difference in ways you may have never considered. It’s important to build a flexible plan that can “grow” with you and your family, and also commit to reviewing it at least every two to five years.

Here are the 10 top reasons — some overlooked — of why you should plan for life changes sooner than you think:

  1. Early planning can help avoid an unnecessary tax burden. Let’s face it: None of us want to pay any more in taxes than is absolutely necessary. However, you can’t save on taxes unless you are willing to take strategic steps sooner rather than later. If you are willing to pay taxes earlier at lower rates, you will be left with tax-free assets in retirement or to leave to your children. One speaker reminded us that required minimum distributions are just that — minimum distributions. Consult with your tax professional to pay taxes at the right time. Sometimes, in our haste to avoid paying more tax, we take a short-sighted view of long-range needs.

  2. Investigating life insurance options earlier in life allows for a less expensive purchase of more benefits. It goes without saying that life insurance is cheaper to purchase when we are healthier. The problem is that we often are unwilling to invest in life insurance as an estate-planning tool until our health prohibits us from qualifying for such a benefit. If parents desire to keep the farm operation intact for the next generation, life insurance may provide liquidity upon the death of parents. It can fund the “buyout” of off-farm heirs and treat siblings who do not want to be involved in the operation fairly. Purchasing life insurance provides the ability to gift cash instead of farm assets to off-farm children.

  3. Planning sooner provides more long-term care options. Unfortunately, a nursing home stay is not getting cheaper. Planning early gives access to products that can provide long-term care funds if they are needed.

  4. Creating a flexible plan early creates a structure from which you can build. I describe estate and succession planning as building a pyramid. Start with your base-level documents and build up. You will have less to do when you are ready to make more difficult transition decisions.

  5. Starting succession talks sooner can pave the way for a better understanding among your family. Talking sooner sets the stage and sets expectations. As a parent myself, I want my children to know I worked hard to plan for the inevitable in the best way I could and that it is important to me that their relationship remains intact. I also know that, above all, relationships with my parents, sibling and our spouses and kids are most important. Remember, there is no one-size-fits-all farm succession plan because each family is unique. Each family and each farming operation needs a personalized plan. In my experience, communication is key to develop a plan so that your kids will remember you in a positive way.

  6. Building your team early and making needed adjustments ensures continuity and a team that grows with you. Finding the right people for your team takes time. Start early, and you will build a strong team.

  7. Death is not the only factor for which to plan. We are all aging, whether we like it or not. The chances of developing a condition that may impair or rob us of our ability to make important health or financial decisions for ourselves rises each year. The number of Americans ages 65 and older is projected to double by 2060, according to the Population Reference Bureau. That said, powers of attorney are just as important for young people. The risk of disability or impairment often is higher than death for younger generations.

  8. Planning sooner allows your on-farm heirs to plan for a buyout. The sooner you can inform off-farm heirs of the approximate amount of money they will need to accumulate to fund a buyout of siblings or others, the better.

  9. Planning while healthy is just easier. Do you do your best work when you are stressed, grieving or unable to understand all issues facing your family? Of course not. Planning when you are mentally and physically healthy ensures there will be few gaps in your plan. If you have ever been an estate executor or placed in charge of transferring assets of a family member, you know that it is hard to grieve while carrying out a loved one’s wishes. Planning at your best ensures that you are able to clearly communicate your wishes to professionals who helped you create your plan.

  10. Planning early is a gift to your family. Just taking action relieves stress and is the best lasting gift to your family. If you care about the legacy you leave or have been through a messy family situation over a lack of planning, you understand this already. Even taking small steps, such as executing powers of attorney or addressing disability insurance needs, will relieve stress for your spouse or children when you no longer are able to make decisions for yourself.

Related:Six agronomic steps to take for 2025

About the Author

Erin Herbold-Swalwell

Erin Herbold-Swalwell is an attorney with Wickham & Geadelmann PLLC.

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