Agriculture is one of the most unique and demanding professions that a person can pursue. Farmers are at the mercy of the elements. They may have to go out in the middle of the night to take care of livestock when a predator encroaches on their property or get up before the sun rises to tend to their crops.
Due to the unique demands inherent in growing food and raising animals, farmers are subject to different requirements regarding employment law, insurance and other common requirements for businesses. Farmers also have unique concerns when it comes to passing the business on to the next generation and keeping it running if something happens to them.
In-depth succession planning is important for farmers, especially those not currently training a family member to take over the farm.
How does succession planning work?
At its most basic, a succession plan is a series of instructions combined with crucial information that allows someone else to take over your job. As a farmer, your succession plan might include information about ownership of and loans on farm equipment, agreements with other neighboring farms, informal easements and common practices.
If you want your child or grandchild to take over the farm, they will need a lot of information to do so properly. From details about how you connect with short-term seasonal laborers to the specific chemicals, fertilizers and plant strains that you use, you need to commit all of your knowledge to the plan you make.
In theory, your succession plan should include so much detail that your successor can pick it up and start doing your job once they read and understand the document.
Farmers also have to consider the ownership of their property
Farmland can be worth large amounts of money, which can make it vulnerable to legal claims. For example, if your successor goes through a divorce, their spouse might try to claim some of the land’s value. If you want to pass it directly to a family member, the value of the property might be high enough to qualify your estate for federal estate taxes.
Protecting your farmland is often a big part of succession planning as a farmer. Many farmers use a trust to protect their property and limit claims from spouses and creditors that could diminish the value of the farm for future generations. Succession planning and property ownership transfers are concerns that those who run agricultural businesses should not ignore.