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Transitioning the Family Farm to the Next Generation

By Dale Kooima, Rock Valley Location President

 

How do I pass on the family farm to the next generation, and how do I start?

I have been fortunate to work at Peoples Bank for over 30 years, and this question has been asked pretty much every year I have worked here. Even after all of these years, I have not found a specific easy answer, and there is no quick solution as every situation is a little different. 

2 people shaking hands. Text: Passing a family farm to the next generation requires careful planning & coordination between family members & a team of professionals.

A couple of consistent items I have seen in a majority of the successful transitions are getting the entire family involved and having open lines of communication among everyone.  The hardest part for me is to see a loving, functional family torn apart after the parents have passed away, and the children didn’t know what the parents wanted for the next generation or how to get there now that the parents are gone. 

 

Create a team to assist with the transition

One of the most challenging transitions are when one or two children want to farm or have started farming with the parents, while the rest of the children have either moved away or have no ties to the farm.  Sometimes the hardest part for the parents is to communicate between each other on what they want the transition to look like.   Once they have decided what that looks like, they should create a “team” to help get this accomplished.  This team should consist of your banker, a CPA, an attorney, and a Wealth Management Group.  All of these professionals bring something different to the team, but if they are doing their jobs correctly, they will all help get the farm family to work together and get the assets transferred according to what the parents want.

3 people talking. Text: Don't wait to start the process - many successful transitions begin when the parents are in the prime of their farming careers rather than waiting until retirement age.

Another item that shows up consistently in successful transitions is that the parents start the process in the middle of their farming careers and not wait until they are retirement age or ready to move off from the farm.  This also makes it one of the most difficult as the parents are still trying to accumulate assets and the children are just starting their farming careers. They have to try and determine what the farm will look like 15 – 20 years from now.  This is another reason to have a team as all of those professionals can assist the farmer in addressing items such as taxes, trusts, life insurance, and multiple other items.

 

Peoples Bank can help with the transition process

We live in the best agricultural area in the world, and our strengths are the family farms. This will hopefully continue long into the future.  Don’t be afraid to ask how you can transition the family farm to the next generation. With a lot of communication and putting the correct team together, the next generation of family farmers can continue your family’s farming legacy.  Be safe, and may 2020 be a blessed year for all of you.

Our ag lending experience helps us understand the needs of those in our communities whose livelihood depends on agriculture. Visit us today to learn more about our services designed for ag businesses, from farm management to an array of ag loans.

Man in soybean field. Text: Contact Peoples Bank to learn about our variety of services designed for ag businesses.