Transferring the Family Farm or Business (and Other Near-Death Events)

 

There is a lot of pressure these days to learn all we can about the best way to pass a parent’s assets on to the next generation. This may be more important to families with a long family history of farming with children that will not likely stay on the farm. Retirement, transferring a family business across generations, and estate planning are things that get put off because we don’t like to think about getting old and dying. Farmers tend to plan for retirement when knees and other body parts start wearing out. Successful navigation of our senior and end-of-life events, begins decades before.

 MU Extension has a curriculum development project on retirement, succession planning, and estate planning. They are offering these classes now. While you wait to attend these classes, here are some ideas to get your thinking started.

Start Planning Early.  Planning doesn’t just happen, it takes some initiative. Begin by taking an inventory of what one has, deciding what to do with it in the    future, and then communicate it with all the people who need to know about it: family (parents and children), legal professionals, and financial planners. The sooner retirement saving begins the easier it is to be secure later in life.  Succession Planning, or the transfer of the farm or family business from one generation to the next, can begin early when the children are young adults. Estate Planning should be done early and can always be modified later. We expect our parents to always be there, but the death of the first parent always comes too early. It is important to be ready for that event BEFORE it happens.

 Communication is Critical.  We all make plans as we work alone, drive, and attend meetings. But it isn’t enough to just do the planning in our heads. It is important for husbands and wives to share their visions, and also for the kids to understand their parent’s plans and explore what their own developing interests are.  We all know of folks where the parent’s planned for one scenario and the kids actually had no interest in what the parents had planned.  It works better to talk about your plans.

 Not Planning is a Choice.  The State of Missouri will provide for the distribution of our assets for us even if we do not do any planning.  The Probate process is carried out through Probate Court. Estate Planning provides additional control over one’s property that Probate Court does not offer.  Similar costs of choosing not to plan occur with succession planning or retirement.  Planning allows control.

Time is Money.  As an economist, this is more than just a cliché to me. Land prices keep going up.  Even with the inflation and collapse of land prices in the 1980’s land prices have been increasing at an average or 6 percent a year for                  decades. Regardless of that history, our land in southwest Missouri is a bargain. Farmers in areas with much higher land values can sell that land and move to southwest Missouri and start again. If your son or daughter is buying into your  operation, it can be more cost effective sooner than later. Saving for retirement also becomes more costly with fewer options the  longer that process is  postponed.

Our class in retirement, succession planning, and estate planning will be a great tool for Missouri residents to plan for retirement, transfer of their family-owned businesses, and distribute their assets to their heirs. Planning for these events can be complicated and intimidating, but it is easier the earlier it begins. Our new program will prepare participants, now, to begin work with their legal and planning professionals, provide confidence, and help them make the most out of their approaching near-death             adventures. Watch for it coming to a county near you soon!

Source:  Mark Jenner, MU Extension Ag Business Specialist