Wallaces Farmer

If winter meetings have you ready to start planning ahead, here are the next steps to consider.

Erin Herbold-Swalwell

February 16, 2022

5 Min Read
Gavel at the judicial office
SET FOR DISCUSSION: Are you primed to start those succession talks with the family? There are a few steps to consider before moving ahead.Wutwhanfoto/Getty images

This winter, you may have spent valuable time talking with your family about the transition plan for your family farm operation. Or, you may have attended meetings with other farmers and educated yourself on succession and estate planning. If you did, you are not alone.

If you are unfamiliar with the legal tools available for estate planning and succession planning, consider taking a class or workshop conducted by Iowa State Extension or other farm organizations. These courses will provide a good base of understanding relating to wills, trusts, entities, etc. The next steps are critical to continuing that momentum to make progress on your planning in 2022. This month’s column focuses on those next steps and what to prepare before you meet with your advisers.

Know your goals

Goal-setting is an often overlooked first step in the succession planning process. Whether you have an on-farm heir or not, the main goal is often to see the farming business transition to another generation. Creating clear, achievable goals and being able to articulate those goals is critical. Don’t worry, there are plenty of resources available to facilitate this process, including resources at Iowa State Extension, or other professionals that specialize in farm succession planning and advice. Don’t go it alone.

There are also several important questions that can be resolved in the goal-setting process. For instance, what value is the “on-farm” heir contributing to the operation? How do you measure that value from an equity standpoint? What is your retirement plan? Do you have a farm business entity, and can you use that entity as a farm succession planning tool? At the onset of the succession planning process, one of the issues that should be discussed is whether a business entity can play a part in the plan. And, finally, talk with the people or entities you are considering involving in your estate and succession plan ahead of time.

Prep for that attorney visit

Consider completing a questionnaire to send to your attorney ahead of your initial meeting. Iowa State University Ag Decision Maker provides a good resource available at bit.ly/admestateplan. This questionnaire helps you create a comprehensive list of critical information as you work through the planning process.

Attorneys also like you to gather information related to documents you may already have in place, such as wills, revocable trusts, and powers of attorney — no matter how old those documents are. I would also encourage you to bring along deeds, real estate contracts, buy-sell or machinery-sharing agreements, farm lease agreements, life insurance policies, entity documentation and net worth statements. Be prepared to discuss the assets you have available in retirement, income needs and long-term care plans.

Remember, your accountants and CPAs, consultants, financial advisers and your banker can help you prepare for your meeting and can provide helpful documentation. All of the above documentation will make your initial meeting more efficient and effective.

Understand how you own your land

As you gather your deeds, it is helpful to understand some of the common ways people own farmland in Iowa, and some of the common terms associated with farmland ownership. The two most common forms of land ownership between co-tenants are the joint tenancy with right of survivorship, and the tenancy in common.

In a joint tenancy with right of survivorship, the surviving joint tenant(s) inherits the portion owned by the other tenant(s) when they die. The key words in this type of tenancy are “with right of survivorship.” A tenancy in common means that the co-tenants all own an undivided interest of the entire property. A tenancy in common lacks the survivorship component associated with the joint tenancy with right of survivorship. In other words, a tenant in common may sell, transfer, gift or will their undivided ownership interest to whomever they choose.

Each tenant in common has an unrestricted right to possess and access the property. In other words, the owner of an undivided interest owns a portion of the entire property. In the case of a tenancy in common, where each co-tenant owns an undivided, equal portion of the land, all tenants would need to agree on important decisions.

For instance, if one tenant in common wants to sell the land, all the tenants in common must agree. If an agreement cannot be reached, there is a remedy available in Iowa for the tenant in common who wishes to terminate or destroy the tenancy. A tenant in common may file a petition to partition the land with the courts, even if the other tenants in common do not agree. Prior to filing a petition to partition the land, a tenant in common would need to consult an attorney to understand the specifics of that process.

Collaborating with the next generation

In February, I had the opportunity to speak with farm families across the state at the ISU Beginning Farmer Center Farm Transitions Conference and at the Iowa Farm Bureau Federation Young Farmer Conference. The title of my talk was “Tools for the Transition — A Legal Guide to a Successful Farm Transition.” After meeting several of the attendees, I was pleased to see so many young people taking an active interest in moving the succession plan discussion from reaction to action. Based on the representation at these events, the future in our farming communities is something to look forward to.

Remember, no plan is perfect. Sometimes our need to figure out the “perfect” plan stands in the way making progress and gaining clarity. The best plans need to be understood, and flexible enough to change as family and business circumstances change. Once you have set your goals, consulted with your heirs and other trusted professionals, make that appointment with your attorney. If you don’t yet have an attorney to assist you in these matters, ask for referrals from trusted advisers and friends.

Herbold-Swalwell is with Herbold-Swalwell, Parker & Geadelmann, P.L.L.C. You can reach her at [email protected].



About the Author(s)

Erin Herbold-Swalwell

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

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