The Dos and Don'ts of Farm Succession Planning

Planning for the succession of your family farm should not be something to put off. After running the family farm for decades, you’ll want to pass the farm to your beneficiaries and give them the tools to preserve your legacy. Equipped with the right knowledge, you'll be able to streamline the transition process so that your family’s livelihood is secured.

What is a Farm Succession Plan?

A farm succession plan dictates the way that your successors inherit your farm. You'll want to create a transition plan, evaluate your assets, prevent conflicts, communicate with your family and provide guidance that they'll need after your death. Creating a plan allows you to assess your family's needs and tailor a plan specifically for your children and your descendents.

What Are the Dos and Don'ts of Farm Plan Succession?

Dont's

• Don't assume that your children know how to run the farm. Even if they worked with you for years, they've never had the responsibility of running the farm themselves. Provide the tools that they need, and outline the process in your succession plan.
• Don't wait until you retire to write your farm succession plan. You don't want an unexpected accident to leave your family scrambling.
• Don't be afraid to talk to a professional. They might not know how to run a farm, but they're experts in estate planning. If your finances are particularly complicated, paying for a professional could save your family months of stress when they inherit the farm.
• Don't assume that your children want to inherit the farm without talking to them first. Make sure that your family wants the responsibility before you entrust the farm to them.
• Don't make a farm succession plan without telling your family where to find the information.
• Don't simply tell your family members what to do--get everything in writing so your plan is legally valid and your children can review it when necessary.

Do's

• Do write a will along with your farm succession plan to cover your entire estate after your death. If you don't write a will, the state decides how to divide your assets.
• Do talk to your children to figure out how to split the responsibility. Your children might want to run the farm together, or you might have one child who wants the farm while the other wants to pursue other interests.
• Do start early so you can write a comprehensive succession plan. Writing a plan can take months, and life circumstances may change.
• Do review your plan periodically so it stays relevant. Otherwise, your plan may not reflect the changes that have occurred if you significantly restructured your business or your family recently experienced a change.
• Do keep your documents organized so your family doesn't have to search for your plan after your death.
• Do figure out how your children can run a profitable farm after your death without being burdened by fees and taxes. Since they can't ask you for advice when you're gone, you need to plan ahead and give them the best chance to succeed.
• Do include a successor development plan that teaches your beneficiaries how to run the farm.
• When in doubt, consider talking to a professional so you can prevent complications and reduce the taxes on your estate.

Reach Out to ClearEstate

ClearEstate offers professional services for farm succession planners across Canada and major US states. We'll offer advice and guide you through the process while providing a digital platform to store your documents. View your plan any time, and review the plan periodically to keep it up-to-date. Other services include a hard copy of your plan, assistance for your will executor and beneficiaries, and a digital vault that your family accesses with a code. Get in touch for a free consultation today.