Answers are from the Agrivision panel: Tom Kestell, dairy farmer, Sheboygan County, Wis.; Sam Miller, retired managing director, group head of agricultural banking, BMO Harris Bank; and Katie Wantoch, statewide University of Wisconsin Extension farm management outreach specialist/professor of practice. If you have questions you would like the panel to answer, send them to: Wisconsin Agriculturist, P.O. Box 236, Brandon, WI 53919; or email [email protected].

I’m 70 years old and, for the most part, I’ve enjoyed being a farmer and milking cows for the past 53 years. I’ve decided I am selling my 60 Holstein cows and 40 heifers this fall and retiring. Milk prices are headed up, and I think they will be pretty decent this fall. I just don’t want to milk cows through another Wisconsin winter. I talked to a neighbor, and he said he will rent my 240 tillable acres. He also said he would buy my feed. I won’t need my machinery, but I don’t have a lot. What can I do to minimize how much I will pay in taxes? Please advise.

Kestell: Changing direction always takes time to make the right decision, but it will pay handsome dividends if the right conclusion is reached. Things to keep in mind about your current situation:

I would talk to an experienced tax adviser on how to minimize your tax liability. Remember, tax planning is not illegal; it is smart business to do so. A few suggestions would be to delay payment for the feed until next year or even later. You could sell your cattle and heifers separately to minimize taxes.

Again, talk to a competent tax adviser about how to minimize your tax liability. Do this before you make decisions that can’t be reversed. Realize that tax planning is a good investment and allows you the time and ability to plan for and pay for your end of career tax liabilities with the least amount of personal stress and hardship. Good luck.

Miller: First, congratulations on a well-earned retirement and successful dairy farming career. To start with, make an appointment with your tax adviser to dig into expected tax impacts of selling your livestock, feed and machinery. Be certain to ask about the option of spreading sales of your assets over a couple of years.

It is likely your livestock and equipment are significantly depreciated, so there would be capital gains tax to be paid. Your feed will likely all be ordinary income, which may have a higher tax rate than the capital gains on the other assets. By spreading the income over two years, you may be in a lower tax bracket. I am confident you will have a workable plan after visiting with your tax adviser. Good luck with the next stage of your life.

Wantoch: Owning a business for over 50 years is a huge accomplishment! Take time to appreciate the years that you have spent farming, looking back at the struggles and the successes. Sometimes we forget how far we’ve come from when we first started. As you consider your retirement, think about what you would like to do with your time. You might consider volunteering locally, mentoring new farmers, assisting with 4-H or FFA projects, being more involved in ag organizations, etc. Retirement allows you to spend your time serving causes you care about and put your many years of experience to work in new ways. Contributing in these ways will also ensure that you stay engaged and remain mentally sharp.

You’ll want to meet with financial advisers, consultants and other professionals to plan for retirement and assess your current tax situation. Best of luck!

My 28-year-old son told me he wants to come back to the farm and eventually take it over, which surprises me because he has worked off the farm for six years since graduating from college. I had no idea he was interested in farming. My wife and I milk 125 cows and farm 250 acres in western Wisconsin. We’re both in our late 50s. We have a mortgage of $275,000 on the land and buildings. Most of that is from expanding our dairy and upgrading our facilities to a freestall-parlor setup in 2014, a couple of years before our son went off to college. Our cows average 27,000 pounds of milk. Our machinery is older but adequate for this size operation. My son says he has saved about $75,000. Where do we begin trying to figure out if this will work?

Kestell: Life is full of surprises. But in farming, the goal is to minimize surprises and stick to a plan so we can manage the expected and level out the bumps along the way. I hope your son has given some in-depth thought about farming and can verbalize what he can envision as his role in the short term — and much more importantly, his long-term goal coming back to the farm. Farming, as you well know, is a marathon, not just a short-term sprint. A few questions to start with: What was your son’s college degree focused on? Is your son married? Does he have children? If so, what are his family’s long-term goals, because everyone must be on the same team to make things work.

In my opinion, the place to start is a very long and complete talk with your wife about your long-term goals. Do you want to have the farm legacy carry on as they say, or were you looking forward to retirement and leaving the farm behind? Your son returning to the farm will affect everything from that day forward.

Start meaningful conversations with your son to understand his surprise decision. Maybe this was not a surprise to him, but a long-held desire that he never shared before. I feel you must be comfortable talking about your shared aspiration before you will be able to work as a team to achieve shared goals. Have you been able to work side by side with your son in the past? Some people have a good working chemistry, and some don’t. Remember, your son is no longer a child, but a young man.

I would work together for an extended time — perhaps a few years, at least, to be able to evaluate if this relationship has the flexible strength for the long term. Treat each other with mutual respect, share ideas, exchange thought processes and expectations. Give responsibilities as your son becomes familiar with the different roles you manage on the farm. Seek his input and insights on both work and management decisions. Several good minds working together will hopefully lead to better solutions and challenges facing your dairy. Evaluate realistically your progress working together, and in time, you will know the proper future path to walk together or not. Good luck!

Miller: This scenario may be a great succession plan for you and your wife. Because you indicate you were surprised with this interest in the family farm, I suggest starting with a goal-setting exercise. Use a facilitator such as a dairy business consultant or Extension ag educator to walk through personal and business goals for each of you separately and then together to see if you both have the same goals in mind. If the answer is yes, then I suggest setting up a timetable and ground rules for the transition of first, management within the business, and then ownership of the business.

The process will take time, both the initial planning process and then the management and ownership transition. You want to be certain your son is running to this as an opportunity rather than running away from his current employment situation. Good luck with the planning process. I hope you can both find success with this opportunity.

Wantoch: It sounds like this will be a big change for you, your wife and your son. I would encourage you to start by talking about the farm business. Does your son know the history — when you bought the farm, the reasons for your farm expansion and upgrades, other important details? Do you rent farmland, from whom and details on this history? Knowing how the farm business began and has grown over the years will help you plan.

Next, you and your wife should develop and discuss your intentions and priorities. Thoughts about transitioning to your son? Do you want the farm to remain in your family’s possession? Do you have other children who are not involved in the farm? Have you taken steps to make sure the farm business will continue (estate planning)? Identifying your needs is an important step before discussing with your son what his needs are. You’ll want to match your priorities so you can continue to operate the farm together.