A plan is needed to pass farm and ranch family operations from one generation to the next.
The Nebraska Extension office has developed a number of resources to support farm and ranch families that do not have a succession plan, according to TheFencePost.com in “Extension helping Nebraska farm families plan for the future.”
The article concerns a report that half of all Nebraska’s producers do not have a succession plan in place. This leaves the next generation at risk, if they want to continue to operate the family business. A succession plan forces operators to answer numerous questions about business, family, tax and legal issues, so it’s important to plan ahead.
The Nebraska Extension office has developed several resources to support the families through this challenging decision-making process. In addition to educators available year-round, workshops have been developed to help members of the family understand the value of creating a succession plan.
For a farm to transition to the next generation, the size of the operation must be considered. It takes roughly 1,200 to 1,500 row crop acres to support a family. Will there be enough land to support the new family, as well as the older generation when they are in retirement? That means that crop farmers may need as much as 2,600 acres to 3,000 acres to support the younger and older generations. If the farm includes livestock, the number of farmland acres could be lowered.
In some situations, two families are trying to live off a farm, that simply isn’t able to support them.
When it comes to estate planning, it’s common for older generations to want to divide their assets and land equally among their children. While it seems like a good idea, this type of division can lead to problems. For instance, if one child and spouse has devoted themselves to keeping the farm going, what should happen to the other child and spouse who aren’t involved in the farm at all?
Treating the next generation fairly doesn’t always mean treating the children equally. This is a dilemma that many family businesses encounter, whether the family business is a farm or a trucking business.
Many people contact the Nebraska Extension, when they are in their 50s, have inherited a ranch or farm and have never run an operation before. They need help figuring out whether to keep the farm, how to run it and how to make legal decisions.
A key to the success in making sure the next generation continues to run the family business, is planning well in advance and keeping the lines of communication open among all family members.
Resource: The Fence Post (Aug. 8, 2018) “Extension helping Nebraska farm families plan for the future”