Things to consider during a farm transition from one generation to next

Questions and issues from families about transferring their farm businesses to the next generation continue to come into my office, with several calls and on-farm meetings in the last few weeks. Maybe it’s the weather or tax season, but whatever the reason, at least families are giving the topic consideration.

Attorney needed

Most farm business transfers will involve a group of experts to advise you through the process. In most cases, an attorney will need to be a part of the transition process.

For some, finding an attorney the family feels comfortable with can be difficult, but it can be done.

Options available to help you locate an attorney include: reviewing websites of law firms that specialize in estate planning, talking with friends or relatives about attorneys they use, or using one who has advised your family on other legal matters related to the business.

When meeting with an attorney for the fist time there are several questions you will want to ask, including:

• What is your expertise in the field?

• Have you handled matters similar to mine?

• What paperwork is involved?

• What are your rates and how often will you bill me?

• Will you consider doing the work for a flat fee?

• Can you give me an estimate of the cost?

• How will you inform me of the progress?

• Do you have any conflict of interest?

• Who else in the office will work on my case?

• Can paralegals or junior attorneys handle some of the work at a lower cost?

First meeting

Your first meeting should be one where you and the attorney get to know each other. The attorney will want to know some background about the farm and your goals for transferring ownership. Come prepared with written information about your background, goals, and questions you have for the attorney.

Documents the attorney may ask you to bring to the first meeting might include:

• Business plan or summary of information about your farm.

• Financial records (balance sheet, tax returns, financial statements).

• Any agreements or information about the organization of the business.

• Organizational chart or diagram of the people involved.

Once the documents have been reviewed, the attorney may provide you with alternatives.

Clear understanding

Make certain you understand the pros and cons of each alternative. You want to make sure when you leave the office you and the attorney have a clear understanding of the present situation, goals, and next steps. Discuss with the attorney how you will be billed, how you should expect to receive communications and that you want copies sent to you of all correspondence prepared on your behalf.

There are a few things you can do to help minimize your attorney expenses:

• Don’t call unless you have a good reason — attorneys typically bill for phone calls.

• Plan meetings at the attorney’s office — you will be billed for travel time and costs.

• Ask for an itemized bill that provides detailed information — this may help you see where to trim costs, especially with communication.

• Do your homework. The more time the attorney spends preparing your transfer, the more you will pay.

We’ve all heard the lawyer jokes, but attorneys are most often a necessary resource to guide you through the transition process. Find one you feel comfortable working with and capitalize on his/her expertise.

Remember, you hire a lawyer to work for you, but don’t expect free legal advice or simple answers to complicated questions!

(Source: PA Farm Link, 2708 N. Colebrook Road, Manheim, PA)

About the Author

(Chris Zoller is an agricultural extension educator in Tuscarawas County and a member of the OSU Extension DairyExcel team.) More Stories by Chris Zoller

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