By Dave Hunt

Sustainability is the buzzword of the day. It's a fairly ambiguous term, and it means different things to different people. The media commonly defines agricultural sustainability as a product that is produced while reducing or maintaining its carbon footprint.

I would define sustainability as a farming or ranching family that has been in existence for six generations. My great-great-grandfather homesteaded in Kansas and raised shorthorn cattle. Today, the three generations that are still living continue to work the land and care for the cattle — now purebred Limousin. That is sustainability.

Naturally, ag producers want to preserve what has taken them a lifetime to accumulate. To leave a legacy to your loved ones for generations to come is a point of pride — and rightfully so. Most people spend more time planning their vacations than they do their retirement strategy.

However, it is important to begin planning early. Increasingly complex tax laws and a volatile, ever-changing economy make estate planning a necessity. Having a plan in place ensures that your estate will be distributed the way that you choose.

A succession plan should be flexible. Family circumstances, finances, market outlooks and health situations change daily. Your succession plan needs to have the flexibility to change when necessary.

Here are three questions ag producers should consider as they begin their estate planning:

1. Who should inherit your assets?
If you are married, before you can decide who should inherit your assets, you must consider marital rights in your state. If you die without a will or living trust, state law will dictate how much passes to your spouse. For example, Nebraska state law says if you die without a will or trust, only the first $100,000 passes to the spouse. The remaining assets are divided 50% to the spouse and 50% between your living children.

Ask yourself these questions:
• Should your assets be divided fairly or equally among your heirs?
• Do you wish to include grandchildren or others as beneficiaries?
• Would you like to leave any assets to charity?
• Would you like to maintain control, even after your passing, with the use of a trust?
• What are your children's long-term plans?

2. Which assets should they inherit?
You may want to consider special questions when transferring certain types of assets. For example:
• If the operation is a corporation, should the stock pass only to those who are active?
• Should those not involved in the business be compensated with assets of comparable value?
• What are the tax implications of passing various assets?

3. When and how should they inherit the assets?
To determine when and how your beneficiaries should inherit your assets, you need to focus on three factors:
• potential age and maturity of the beneficiaries
• financial needs of you and your spouse during your lifetimes
• tax implications

The biggest mistake people make in their planning is "analysis paralysis,” or doing nothing. Usually the conversation of transition planning begins but soon ends because of frustration due to a lack of knowledge of various planning techniques.

No two family businesses are the same. The family dynamics of each family are different, and an individualized plan is necessary.

Don't get frustrated with the process. Engage with a team of professionals who know the questions to ask and the current planning techniques that can be utilized. You will be surprised at the out-of-the-box ideas that they may present.

Your legacy can be passed along for generations to come with just a little planning — that's sustainability.

Hunt is the son of Charlie and Nancy of Hunt Limousin Ranch at Oxford. He is a member of Nebraska LEAD Class XXIV. He is an independent retirement and investment adviser specializing in family business and agriculture estate planning. Contact him at [email protected].