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Create a Farm Succession Plan Before the All Clear Sounds

Can their problem be solved?

Submitted by A.J. 

We farm 560 acres and raise cattle with our son. Our other son might farm after college. Our two nonfarming daughters are married with good jobs. We have simple wills, and our estate is under the $11.2 million estate tax limit. Money is tight! With the current market, I don’t know what to expect next year let alone how our estate should be settled. I want to hold off on planning until we have more certainty, but the kids are pushing to know their future, too. What can we do?


It’s hard to think long term when the short term requires your full capacity. Tough markets make all decisions feel heavier. However, I’ve worked with farm families for 14 years, and I honestly don’t recall a time when clarity was abundant. Even with $7 corn, some land didn’t cash-flow, debts were added, families didn’t always agree, and politicians impacted the economy and tax laws. I would respectfully flip your question around: If it’s difficult for you to operate today, then how could your farming heir(s) expect to make it work after it’s been split up four ways? Would your family be more committed to solving the short-term challenges if they knew a long-term plan was in place? It’s more critical to have a farm succession strategy today than ever before. 

Some people get hung up on planning because they lack clarity on the final steps of their estate. Instead, just focus on your next step. You need strategies to get another five to 10 years down the road. Give yourself permission to simply revise the plan as more facts become known. 

Here are four things that you can control now:

1. Establish rules to provide consistency in the operation in your absence.

2. Determine how long to protect the farm before it’s distributed to the kids.

3. Lay out basic terms for farm buyouts if assets are sold between the heirs.

4. Identify where cash may come from. Options include cash, investments, or life insurance.

Your plan can be set today while allowing flexibility for the future. This includes management control, rental options, and operating agreements to protect the interests of your farming heir(s). When you pass away, maybe you want a cooling-off period that keeps the land together for a few years to get through a tough ag cycle. If land was split between the kids, would it make sense to give your farming heir(s) the first option to buy? Most families use some form of a purchase discount to reflect family values – not market values. It’s also important to consider how to fund any buyout goals. If you aren’t sure which kids might farm someday, you could state that all children who are actively farming (as indicated by schedule F income or W2 income from a family farm entity) share the rental and purchase options.

These are challenging times. You cannot control the markets, land prices, ag cycles, or your kids’ and in-laws’ ambitions. Yet, this is your reality. While it may feel like the kids are pushing, waiting it out can create even more stress. What you choose to do from here is exactly that – a choice. I like this quote from Theodore Roosevelt: “Do the best you can, where you are, with what you have.” You don’t have to know everything to have an effective farm succession strategy. You just need to take your next step.

Your Transition Team Members

Mark McLaughlin is an associate with Farm Financial Strategies in Ankeny, Iowa. For the past 14 years, he has helped farm families across the Midwest develop their farm succession strategies. He grew up on a family farm near Defiance, Iowa, and shares in the fifth generation of ownership. He and his wife have three children.

Jolene Brown is a professional speaker, author, farmer, and family business consultant. Her tested business tools provide leadership and management solutions for the people who feed, clothe, and fuel the world.

Myron Friesen is co-owner of Farm Financial Strategies in Osage, Iowa. During the past 18 years, he has worked exclusively with farm families across the Midwest to develop farm transition strategies.

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