Passing down the land

Passing down the land

By Charlyn Fargo

Having grown up on a farm, I’ve witnessed first-hand the tough decisions when it comes to passing down the farm to another generation. Besides all the emotions, there are real financial decisions to be made.

If you’re associated with a farm, get ready to make those decisions. The best way is to have a plan.

The average age of farmers is now nearly 60 years old, and 60 percent of those farmers don’t have a retirement and/or up-to-date estate plan in place. That means a good chunk of U.S. farm production could be left in limbo in the not-so-distant future. Farmers need to move to secure their financial futures in retirement – and the transfer of their farms into more youthful hands.

Nearly 90 percent of farmers don’t have a farm-transfer plan that will ensure their farms move into the next generation and remain viable, said Carol Goetsch, head of insurance and retirement plans for U.S. Bank’s wealth management services unit in Minneapolis, Minn. That’s concerning considering a U.S. Department of Agriculture analysis that estimated 70 percent of all U.S. farmland will change hands in the next 20 years – or probably even sooner.

Goetsch, who authored a paper focused on retirement realities for farmers, said farm transfers can be challenging and emotionally charged. The land may have been in the family for a long time.

Adding to the challenges may be that the farm owner’s balance sheet likely includes short and long-term debt. Wealth needed for retirement is often concentrated in land, buildings and equipment. Expenses and depreciation often generate annual losses. Participation in Social Security and other types of retirement plans may be limited, and transition to new ownership is usually gradual.

Some 70 percent of first-generation operations don’t successfully transition to a next generation, according to Goetsch. Ninety percent of second generation operations don’t make it to a third generation, and 96 percent of third generation operations don’t survive to a fourth generation.

A strong plan can change those statistics. Goetsch recommends putting a plan in place 10 years before the actual transition happens.

Questions to consider when you make that plan:

Are succeeding family members – including spouses – truly dedicated to farming?

Is the current owner ready to share control?

Do the generations share a common vision? And can they work side by side, day in and day out?

Can the farm realistically support every family member interested in participating in the operation?

How will non-participating family members be treated?

Is there enough liquidity to ease the transition?

Will the current owners remain in their current home, and if so, where will the next generation live?

This spring, before you tune up the tractor and planter, make an appointment with a lawyer or estate planner. It may be the most important thing you do this spring.

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About the author

Charlyn Fargo spent 27 years at the State Journal-Register covering agriculture, business and food. She currently is the Bureau Chief of County Fairs & Horse Racing with the Illinois Department of Agriculture. She is also a Registered Dietitian and writes a weekly syndicated nutrition column for Creator’s News Service ( and is co-owner of Simply Fair, a fair trade boutique at 2357 W. Monroe in Springfield. She has bachelor’s degrees in agricultural communications and food from the University of Illinois, Champaign and a master’s degree in nutrition from Eastern Illinois University. She and her husband, Brad Ware, have a daughter, Kate, and son, Jayden. When she’s not working or writing, she enjoys baking cookies for Simply From Scratch, a company she formed to support faith-based ministries.

View all articles by Charlyn Fargo

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