Studies have shown that passing a family business on to the next generation can be a difficult endeavor. In fact, a 2004 report found that 70 percent of family businesses fail to survive to the second generation and 88 percent fail to survive to the third generation.
“The Department of Agriculture reports that 97 percent of farms are family-owned, which makes the sustainability of our farming industry largely a family issue,” said Peter Golato, senior vice president of Individual Protection for Nationwide Financial. “It’s important that farmers receive the guidance they need to develop and execute transition plans that will help ensure the continuity of their farm, the financial security of their family and the success of the entire farming industry for generations to come.”
Here are some basic tips farmers can use to help transition their farm and assets to the next generation:
Talk with loved ones
The findings of the 2007 Census of Agriculture show that the fastest growing group of farm operators are those age 65 and older and more than 823,000 farmers now fit that demographic. As farmers age, it’s important that they talk with their families about what will happen to the farm when they’re gone and how ownership and responsibility will be divided up. These conversations can be difficult, but having these discussions early on can help your family avoid conflict down the road.
Evaluate your financial needs
When creating a plan for the future, farmers need to take a close look at all of their goals and develop a comprehensive financial strategy to achieve them. This holistic approach can help you achieve a variety of financial objectives including:
- Splitting assets between farming and nonfarming children
- Protecting your farming business from the financial impact of losing a key employee
- Finding ways to reduce the tax impact on your heirs
Don’t go it alone
There’s no doubt that developing a transition plan can be an overwhelming task. However, by working with financial professionals that understand the unique needs of the farming community, you can develop a plan that will help you protect what’s most important.
“We must continue to raise awareness about the need for transition planning among America’s farmers,” said Golato. “This issue is critical for farmers, their families and the well-being of our entire nation.”
Peter Golato is a registered representative of Nationwide Investment Services Corporation, member FINRA. In MI only: Nationwide Investment Svcs. Corporation.
Ohio Farm Bureau is a sponsor of Nationwide and endorses the company’s coverages. For more information, visit nationwide.com/ofbf for a listing of local Nationwide Insurance agents.