Whether your farm has been in the family for generations or you started the enterprise a few years ago, your farm is a source of family pride. If you want your legacy to live on after your passing, you need to plan ahead.
It is crucial that you have a solid plan for your farm that states what should transpire in the event of your retirement or death. Designing a farm succession plan can be challenging and complex.
A good first step is examining the current business structure. It may be a sole proprietorship now, but you may choose to change to a cooperative, limited partnership or limited liability company.
You may want to create a trust as part of your estate plan. Doing so gives you a chance to designate a trustee and beneficiaries, plus leave detailed instructions regarding distribution of assets and use of the estate. Creating a trust can help heirs avoid the delays and expenses associated with probate.
Valuation of assets
Many factors affect your farm’s value: the real estate, your brand and reputation, various equipment and buildings. The value of the land fluctuates widely based on how you use it. According to the U.S. Department of Agriculture, Illinois pasture land in 2019 was worth approximately $3,170/acre but land used for crops had a value of about $7,300.
The business of a farm is separate from the land and assets. In your succession plan you determine who takes over which parts of the farm operation. Some decisions may come easily; if one heir works on the farm daily while another has moved away and established a dental practice, the choice of who will run the farm is all but made. Unfortunately, most cases are not so clear-cut. Addressing matters now can help reduce conflict within the family. Taking early action allows you time to communicate with everyone involved and amend your original plan if necessary.