When it comes to succession planning, there’s a good chance a major voice is being left out – your farm or land. It’s important to consider how a succession plan will affect the well-being of your farm and land, says Nationwide’s Don Schreiber.
“Let the farm ‘speak.’ Ask what it wants, how bad debt will affect it, what will happen if it’s split up. Is the in-law really an outlaw who just wants the money and doesn’t care about the land or farm? Ask the farm what should be done to keep it alive,” said Schreiber, a director in the advanced consulting group at Nationwide.
This tip on what it takes to get the farm from one generation to the next is just one of many that Schreiber has for farmers and landowners who are considering making farm or land succession plans. Schreiber and other Nationwide agents hold informational meetings around the state as part of Nationwide’s Land as Your Legacy succession planning initiative.
The initiative outlines four major steps for successful succession planning:
- Farm or land income. Is there enough income to support both the current generation and the next generation? A wide variety of benchmarks and formulas are available to help families see where the financial liability of their operation stands and if there are ways to minimize taxes, Schreiber said.
- Risk management. While risk in the form of weather, prices and yields has always been a part of agricultural operations, potential medical costs have become a major financial risk. A succession plan needs to take into account the costs for medical treatments, prescription drugs, hospitalizations and long-term care. Dealing with these issues can be very taxing in both time and money, Schreiber said.
- Mentorship and financial independence. The older generation has a wealth of information about its land and family business that should be passed on so the next generation can thrive. When the time is right, start sharing that information and insight and start giving more control of the family operation to the younger generation. “Nurture the next generation the same as you would with your crops or animals. Don’t let that information go to the grave,” Schreiber said.
- Estate planning. A good estate plan needs to be both tax and cost efficient and address the needs of key stakeholders, including family members who aren’t actively involved with the farm or land. It should include items that are not covered in a living trust or family trust such as health care power of attorney.
County Farm Bureaus periodically sponsor “Land as Your Legacy” seminars. To request or find out if a seminar is being held in your area, contact your county Farm Bureau.
Neither Nationwide, nor its employees, its agents, brokers or registered representatives gives legal or tax advice. You should consult an attorney or competent tax professional for answers to specific tax questions as they apply to your situation. Nationwide and Land As Your Legacy are service marks of Nationwide Mutual Insurance Company. © 2016 Nationwide