Dean F. Reisner of Varnum LLP has made available for viewing his article regarding succession planning on the family farm, which was originally published in the Michigan Farm News.
The article beings as follows:
With the fall harvest complete for most farmers, now is a good time to give some thought to an estate plan and farm succession plan.
As farmers know, maintaining a profitable farm operation is difficult. It can become a daunting task when you start to consider passing the farm to future generations. Nonetheless, one of the biggest priorities for most family farms is that the farm will continue for future generations.
A few years ago, the Cooperative State Research Education Extension Service estimated that approximately 70 percent of farmland in the United States would be under new ownership by 2028. In a cautionary note, that organization indicated that without the proper succession planning, family farms are more likely to cease operating or be acquired by neighboring farms. Similarly, another survey found that 26 percent of farmers said they were unsure who will take over their farm. For farmers age 60 to 69, 15 percent do not yet know who will take over the farm. Without proper planning, you may be setting your successors up for failure because only about 30 percent of family businesses survive to the second generation.
In my experience, the biggest problem that many farmers face is waiting too long to start the process. For some, this delay may be a result of not wanting to potentially change how the farm has historically been operated. Perhaps the mention of limited liability companies or other entities is confusing. While many succession plans utilize entities to provide legal protection or to assist in the transition process, there is no one-size-fits-all plan. For others, the delay may be a result of not knowing where to start. In any case, succession planning and estate planning do not need to be overwhelming undertakings.
Find the full article here: Don’t Put Off Succession Planning for the Family Farm – JDSupra
Posted by Pooja Shivaprasad, Associate Editor, Wealth Strategies Journal