Succession/Transition Planning

For whatever reason, you are preparing for your successor to take over the farm in the near future. You may be interested in ensuring that the land you’ve worked for years remains a farm after you move on. You may have a family member or friend who’s interested in taking over the farm or farm business, or you may be looking for someone to take over. Either way, beginning these conversations, navigating the legalities, paperwork, budgeting, and detailed steps with those around you can be challenging.

Succession/Transition Planning- Your Exit Strategy

Succession planning, also called transition planning, is vital for planning how your farm will operate once you’ve moved on. To many, this planning means determining how property will be distributed from one generation to the next, how the property will be owned, how the business will be organized, and the tax and legal implications for that business. A successful succession plan involves current and future business goals and will rely on the help of attorneys, accountants, insurance agents, financial planners, and more. Farmers should not engage in this planning process by themselves; it is important to form a network throughout this planning process. Many farmers ask when they should start planning and we highly recommend beginning this process as soon as you start farming. Important facets of your farm to consider when succession planning may include:

1. Identifying and training your successor;
   1. Formalizing staffing structures- though not all farms have employees, they can be instrumental in supporting continuation of your farm business after you leave the industry;
2. Consider the strategic vision of the business;
   1. This might include whether or not the business has the potential to continue beyond management of the current owner;
   2. Talking through what the current owner pictures for the future of the farm (grow in size and scope, remain the same size, be bought out by a larger company);
   3. How the current owner might quantify the net worth of the entire business;
   4. If the current business structure makes the most sense for the farm (sole proprietorship versus LLC) 
3. Finding ways to ensure that your farmland is used for agricultural purposes going forward. This may take the form of a conservation easement, a trust, through a Purchase of Development Rights or something else entirely.

Within these conversations, it’s vital to ensure that the current owner and potential future owners or business partners have the same expectations which can be detailed in a governance document. It is also vital to make a good recordkeeping routine and to take notes. Finally, it might be beneficial to seek help from an attorney or accountant.

Variety of ways to see if transfer is feasible- is it financially feasible? link resources here- extension farm management educators or farmnet can assist

American Farmland Trust’s Land Transfer Navigators program– the goal of this program is to increase the transfers of farm and ranch land to members of newer generations. This program supports retiring landowners, new generations entering the agricultural sector and looking for access to land, other members of the family or farm communities that are involved in a transfer, and other organizations interested in providing land access.

Farmland for a New Generation New York– provides resources to connect farmers to land.

Cornell Cooperative Extension Farm Estate Planning– basic resources for farmers looking to transition their farmland

New York FarmNet– works with families to provide a network of contacts and support services to help develop skills for dealing with transitions. This webpage provides a list of resources which may be helpful to farmers.

CCE Succession Planning Fact Sheet– Provides resources for farmers looking to build an advisory team or identify an advisor to begin succession planning.

Purdue University’s Code Red Contingency Planning Notebook– This database collects and holds critical farm and farm business information in case a farmer becomes unable to continue operating their farm.

For more information, see the Farm Transition Planning section of the Ag Law Education Initiative’s publications website. Here, you can find resources for more information about succession planning as well as pointers for choosing an attorney, understanding estate tax law, creating contracts, and more.

Farm Commons also has a plethora of resources including resources around Farm Succession and Farm Planning.

Syracuse- New York State Succession Planning Guidebook

The University of Minnesota Extension has compiled resources about transfer and estate planning.

For Further Reading

Finding An Attorney for Your Case Requires Asking the Right Questions by Paul Goeringer. UME FS-1097, Sept. 2019.

Conservation Easements: A Useful Tool for Farm Transition and Estate Planning  by Dr. Lori Lynch and Paul Goeringer. Department of Ag and Res. Econ. UME FS-974, September 2016

Funding

For information on grants and financial opportunities for your farming operation, visit the ‘Grant Opportunities for Farmers’ fact sheet.