Death, divorce and disability can leave a farm struggling financially if there is no contingency plan in place, says a Purdue Extension financial planning and tax specialist.

A contingency plan defines how a farm will recover from a critical event to resume normal operation. It helps producers think clearly in emergency situations so they can avoid trying to solve problems at the last minute.

"All too often producers do not think about negative, rare events that could happen on their farms." George Patrick said. "What if the person responsible for the farm's daily operation could no longer help? Is there someone that can help on a part-time basis, or is there another change that needs to be made?

"A contingency plan gets people thinking about what can occur and how to find a solution if it does. While farmers can't plan for everything, they can think about the types of extraordinary events that can occur and link them with possible consequences."

There is not a general plan that fits every producer's needs, and it may be best to bring in advisers. Often these outsiders can offer ideas and solutions that a producer never thought about.

An attorney can set up the plan's framework to allow daily tasks to continue in the event of a death, divorce or disability. Farmers also should discuss plans with spouses and other family members involved with the farm operation.

"The kitchen table is a great place to start planning for emergencies," Patrick said. "People sit down at breakfast to talk about what they are going to do that day, so they might as well think in long-term scenarios."

Not all contingency plans are designed for bad situations. Today's commodity prices are increasing cash flow, and many farmers have not planned for the higher profit.

"It's a temptation to go out and buy new machinery for tax savings," Patrick said. "That may not necessarily be what is best for the long-term operation of the farm."

Being creative when developing a plan is key, he said. An eight-page planning guide is available for free download at the Purdue Extension Education Store at https://mdc.itap.purdue.edu/item.asp?itemID=19847.