Whether it’s the 4th of July or President’s Day, Martin Luther King Jr. Day or Memorial Day, there is a lot of discussion about legacy and what each of those days and people mean to our country. We think there should also be talk of Farm Legacy Planning. So when it comes to agricultural producers, including those who work with them and those who love them, what exactly is the “legacy” for which we are planning?
There are two definitions for “legacy” offered in the dictionary:
- A gift by will of other personal property such as money.
- Something acquired from someone or from the past.
I think for agricultural businesses, which definition is most important depends on the families involved. Certainly we are concerned with assets and property. But often we are seeking to continue a tradition or sustain an agricultural enterprise into the future to honor our ancestors who began this work. I mean, the real question is, how do you pass down the family farm?
Continued tradition is the true challenge of exiting an agricultural business. To create a plan that carries forward with vigor across generations is not automatic. It requires commitment and intentional action to systematically move toward the successful transition.
I suggest written goals for the business owner as a place to begin. Put your intentions in writing. Share them with your spouse, your business partner and your family. Then get to work bringing them to life.
Experts suggest goals in three areas as a start:
- Goals for all the individuals involved in the enterprise;
- Goals for the family as a group; and
- Goals for the business
Questions for Farm Legacy Planning
It’s often helpful to consider both the positive and the negative aspect:
- What do you want for the individuals now part of your enterprise?
- What do you NOT want for the individuals now part of your enterprise?
- What do you want for your family?
- What do you NOT want for your family?
- What do you want for the business?
- What do you NOT want for the business?
Have every individual involved in the operation look at this list and prepare their own answers. They should think about these questions on a short-term and a long-term basis. Prepare your answers individually.
Try this exercise and let me know what you learn from it. Later we’ll talk about how to move forward from the individual lists to a plan of action for transferring the farm or ranch business.
If this blog has you starting to think about your own circumstances, get in touch with my office firstname.lastname@example.org. I am always delighted to visit with folks who are working on their farm business transition process. Dunncreek Advisors does not provide legal or tax advice, nor is this article intended to do so.