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Opinion: Succession and estate planning vital for farmers

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Farming is not an easy way to make a living. For many, it’s a calling passed down from one generation to the next.

While farmers are renowned for their resilience and adaptability in the face of challenges, one aspect often overlooked is the need for professional succession and estate planning, which can be the difference between sustainable growth and longevity or long-term decline of your farm or ranch.

Succession planning involves the orderly transfer of management and ownership from one generation to the next. It is not merely a legal formality but a strategic process that requires careful consideration and proactive decision-making. Likewise, estate planning goes hand in hand, addressing the distribution of assets and minimizing tax liabilities upon the owner’s passing.

The truth is, everyone has a succession and estate plan. It’s just a question of is it the plan you created for yourself with a trusted advisor or is it the one your state has created for you?

The importance of succession and estate planning in farming cannot be overstated. 

Smooth transitions from one generation to the next minimize disruptions to farm operations. Adequate planning allows for the seamless transfer of management responsibilities, preventing any gaps in decision-making and ensuring the ongoing productivity of the farm.

Farming is a capital-intensive endeavor, and the financial implications of inadequate planning can be significant. Effective succession and estate planning can help mitigate tax burdens, optimize asset distribution and safeguard the financial stability of both the business and the succeeding generations.

Many professionals in this industry have some version of the saying: “If you have two dimes and two family members, you have wealth that needs to be managed.” The continuation of that adage would be that it needs management beyond just having a will. While a will is better than having no estate plan at all, it’s little more than a list of instructions your heirs will take to the probate courts, as the document has no legal weight until you die.

Furthermore, probate can be costly and take years to settle. A comprehensive estate plan should protect your legal rights during your lifetime and ensure your last wishes are honored. Consider adding other documents to work with your will, including documents like durable powers of attorney, living wills and a revocable trust.

Without clear succession plans in place, disagreements among family members can arise, leading to disputes that may jeopardize the future of the farm. By establishing transparent guidelines and communication channels, conflicts can be minimized, fostering harmony and unity within the family and the business.

Speaking of family, conflict can also arise if no one is interested in operating the farm. For example, if the family members don’t agree on who to sell to and for how much. Your estate planner should account for this possibility as well.

Agricultural landscapes are subject to various external factors, including economic fluctuations, regulatory changes and technological advancements. Succession planning enables farmers to adapt to these changes proactively, positioning the farm for long-term viability and sustainability.

Despite its significance, many farmers delay or neglect succession and estate planning, often due to the perceived complexity or discomfort in discussing matters related to mortality and inheritance. However, postponing these critical tasks only increases the risks and uncertainties faced by farming families.

Succession and estate planning are not just legal formalities but strategic imperatives for the long-term success and sustainability of farming enterprises. By embracing proactive planning, farmers and ranchers can safeguard their legacies, secure financial prosperity and pave the way for future generations to thrive.

As stewards of the land, it is our responsibility to ensure that farming traditions endure, nourishing communities and feeding the world for generations to come.

Chad Brueckner is a trust officer with Arvest Bank. He can be reached at rbrueckner@arvest.com.

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