Introduction to Farm Succession Planning
Every farm, ranch, nursery, dairy, or other agricultural operation is more than a business. It is a connection to family and tradition and provides essential food, fiber, fuel, and other benefits for society. But without attention to the farm as a business, it will not survive into the future or continue to provide those important connections and services. A farm’s management succession and estate planning are often uncomfortable topics for everyone involved.
Chapter 1 introduction
Gen 1 and 2 (and generations past) built the farm to take care of the family. While we are focused on business succession planning, the ultimate purpose is to keep the family together. A good business plan can minimize family tensions by setting up clear roles and expectations, clarifying the business relationships to allow the family relationships to thrive. A good estate plan ensures that everyone is treated equitably, not necessarily the same or equally, because each family member is unique.
Chapter 2 introduction
The second step in the business succession planning process is to evaluate and tune up the farm’s financial situation. We will accomplish that through an analysis of the farm’s ability to support multiple generations during the transition process. We will review the farm’s income needs, value, rate of return, operating capital, and risk-management strategies.
Chapter 3 introduction
When organizing a business, the first thing we talk about is risk. Every business can and should use legal tools to manage risk by limiting the liability of the owners for the acts of the business. Tools include separate business entities, proper and complete insurance coverage, complete and well-structured contracts, lien rights, and other legal protections to manage risk. We have already discussed several of these tools. Now we will focus on organizing separate business entities.
Chapter 4 introduction
Now we move to the next step of getting the farm business organized: setting up organizational structures that serve the business in the present and allow an easy transition to a new generation of owners in the future.
Chapter 5 introduction
Now that we have organized the business and set it up for an orderly succession process to let Gen 2 retire and Gen 3 take over management, we can show how Gen 2 can use this structure to create an estate plan that protects their legacy, where the farm business is viable and their family is content with the distribution of their assets after death.
Chapter 6 introduction
By working through the business succession and estate planning processes, you have taken steps to preserve the long-term health of your business and to plan for the future of the farm and your family members. Your careful planning preserves the farm and its value into the future. It is important work and is a great gift to your family, to Oregon agriculture, and to society.