Take Root: 10 Steps to Begin Your Legacy Planning Journey
“Before you take root, you must plant a seed,” said Nathan Katzer, business development manager for the Iowa Farm Bureau Federation, as he addressed a crowd of family farmers including my husband and me. What an appropriate send-off to wrap up the series of three Take Root seminars, designed to help families start the conversation to transition their farms to the next generation!
History shows us that only 10% of family farm businesses successfully transition to the third generation. In addition to transferring financial wealth, farm families strive to pass on their emotional wealth: values, life lessons, talents and experiences. Nearly every young person, who grew up on a farm, knows the values of hard work, helping neighbors and striving to care for the land we farm. So why do farms still fail to transition to the next generation for so many families?
Lack of communication and not knowing where to begin are the two most common reasons a farm transition fails to happen. No wonder session one of Take Root was titled, “Strengthen Your Family Farm Legacy.” This presentation challenged each of us to really define what it was we were passing on. It provided strategies to help work through emotional obstacles together as a family and ideas on how to answer the tough questions like how to value sweat equity, determine fair vs. equal among heirs, and transition management early to allow for proper training.
In session two, the focus was on the importance of taking time to work “on” the business instead of just “in” the business. We dove deeper into how to transfer responsibilities and build a farm business plan that includes business successors. We discussed ways to build, grow, diversify, and specialize our operations all while preparing the operation for the next step.
The final session of the Take Root series featured a panel of experts prepared to answer the tough questions. This panel was made up of professionals in business planning, ag lenders, lawyers, and estate planners. We had the opportunity to get some of our own questions answered while discussing financial planning and analysis and employee compensation.