Hello, Northeast Ohio! While the winter winds howled in February, Ohio State University Extension was helping families heat up their farm succession and estate planning discussions through a three-part “Planning for the Future of Your Farm” webinar series.
The goal of this series was to help families begin to plan for the future management and ownership of the family’s farm. With the course being virtual, it allowed sons, daughters and grandchildren in-state or even out of state to join the senior generation to begin the planning process.
Each generation had the chance to learn more about transition planning, how to have those tough family discussions and different estate planning tools and strategies.
Talking about the future of any business is important, especially so for family farms. From a state-wide perspective, Ohio’s ag industry is big business.
In fact, the 2017 Census of Agriculture reports that Ohio has nearly 78,000 farm operations with over 14 million acres of crop and woodland. The value of the land, buildings and machinery owned by these farms is estimated to be over $96.7 billion.
Also, as our farm population ages, the importance of estate planning becomes exponentially more important each and every year. The 2017 Census reports the average age of all principal producers in Ohio continues to increase. Currently the average is 57.1, with 31.4% of principal producers over 65.
With the incredible asset base of Ohio’s agriculture industry and the increasing age of Ohio farmers, the discussion of what happens to the farm in the future is on the minds of many farm families.
During our webinar series, we challenged each participate to pause and reflect on the future of their farm. We asked challenging questions, and through discussion, family planning sheets and reading resources, we attempted to lay the groundwork for important transition and estate planning discussions to be held.
Today, I would like to share some food for thought from this series.
First and foremost, the senior generation (or those who own the assets) must decide what their goals are for the future of the farm. Is your goal to have someone from the next generation own and manage the farm in the future? Or will you be leaving the farm assets to your heirs to manage as landlords or as an inheritance to liquidate?
If your goal is to have the next generation operate the farm in the future, have you identified the son, daughter or grandchild who wants to and is equipped to run the farm? If so, have you taken the steps to train them to manage all facets of the operation?
What shape is the business that you are leaving behind? Is it profitable? What is the current income that it generates? Will the income be enough for a family member to undertake it as a full-time occupation or will it be a part-time management operation?
Our team advocates you to complete an in-depth financial and organizational analysis. What are the current strengths, weaknesses, opportunities and threats of the business? What is the potential of the farm in the future?
Have you taken the time to ask your kids about their thoughts about the family farm? What are their hopes and dreams for the farm? Would they be interested in owning or managing the farm in the future? If they had to take over the farm today, what would they be the most concerned about?
What changes need to be made for them to have a continuing interest in the farm? What are some of their weaknesses that they need to address before they farm on their own in the future? And what are their expectations for an appropriate time for management control to be transferred?
Many times, there is hesitation to discuss the future of the farm because of the “undiscussable” family topics. Communicating about difficult issues can be tough. Stress, family baggage, generational or gender differences and involvement from relatives not involved with the farm can make these discussions even tougher.
Our team encourages families to analyze their communication issues and stressors and take time to identify the elephants in the barn that may be holding you back from having crucial conversations. Here are some examples of “elephants.”
I don’t trust my new daughter or son-in-law. If I leave the farm to my child, what happens to it in a divorce? I want to leave the farm to my son who has worked here for 30 years, but I don’t want my other children to be left out. How can I be fair? My spouse or business partner doesn’t agree on what should happen, so we have decided not to talk about it. What happens if my spouse remarries after I die?
Tape measure of life. Where are you on your tape measure of life?
I had a farmer tell me one day as he measured to cut a board he realized that he had already put 70 inches of his life in the rearview mirror. He said according to statistics, he only had 7 inches left, so he decided to retire while he still had time to enjoy it!
Our farm succession team is here to help you as you develop your plan for the future. Check out farmoffice.osu.edu or go.osu.edu/farmsuccession for resources and announcements of upcoming farm succession programs. Have a good and safe day!
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