Succession Planning
Introduction
Farm succession planning can be an overwhelming process to undertake. Farms not only represent years of hard work and money spent, but are entangled with personal legacy and familial relationships, to name only a few. On this page, we will offer a helpful resources to get you thinking about the succession process; however, reading a few websites and brochures is by no means all the information you need to know.
If succession planning is on the forefront of your mind, please reach out to Phoebe, through the contact form at the bottom of the page, to schedule a more personalized conversation. We want to understand exactly where you are at in the process, what your questions and concerns are, and how we can be of assistance. However, it is important to know that the staff of Alaska Farmland Trust are only facilitators for the process. We want to help you feel empowered as you start. One of the most important steps is to seek the guidance of experts, such as business advisers, attorneys, insurance agents, accountants, and, in some cases, mediators. We will do our best to guide, but certain questions and issues will be outside of our capacity and depth of knowledge.
One quick point of clarification before you dive in. You may see the word succession, transfer, and transition used interchangeably throughout our website and the resources below. In most cases, those words define a similar process of handing over control, ownership and/or management of the farm business and its real estate to a successor.
Where to Begin
One of the biggest hurdles to farm succession planning is just starting the conversation. As the farm owner, you need to engage with children and/or other family members or an identified successor. Both parties must clearly define their goals. To aid in that, Land For Good has a short worksheet on beginning the farm transfer process. We highly recommend working through its questions and prompts which may help clarify and organize your thoughts. And while it is specifically designed for farm owners, it is also beneficial for a successor to answer the questions that apply to them. Once both parties have defined their own goals, they must clearly communicate them with the other.
Many times farm succession is the process of transitioning the business and property to the next generation. There is no one-size-fits-all approach to passing a farm to your children. Every farm and family are different. Issues will range from financial, tax, and legal to legacy, communication, inter-personal relationship. Clear goals and vision along with healthy communication are essential to a successful transition. Montana State University Extension has a detailed guide that focuses on transferring the farm to the next generation. We encourage both you and next generation successor(s) to answer its questions to see how important issues align.
Timing is Key
The best advice you will receive regarding farm succession planning is to begin as early as possible. We have seen a number of farm families start to consider their options only when a health emergency or death causes them to do so. Unfortunately, in many of those cases, it causes an already stressed family to understandably make rash decisions. Many experts suggest you begin at least 5 years prior, but ideally 10, to an expected retirement date or transfer of farm business or property.
Take a look at Land For Good’s infographic on the farm transfer process. It illustrates that this is a multi-step, gradual process. Also, create an action plan with your preferred timeline. As mentioned previously, farm succession can feel overwhelming. Having a document to refer back to will help ground you and the process and provide accountability.
Often times, the first thing people think of in farm transfer or transition is the physical transfer of property. But usually that is the last step, especially if you want to pass down the established business to children, other family members, or a yet-to-be identified successor. For example, the process could begin with the transfer of management duties of the business, then the transfer of the business’s assets, and finally the transfer of real estate. Having a clear vision of how you want to undertake the process will lead in its success.
Farms without Identified Successors
Beginning farmers across the country, and especially in Alaska, are increasing. Many of these new farmers do not come from farming backgrounds and do not have family farms to inherit. Their biggest hurdle is access to land. If you are a farmer looking to transition out of an existing farm operation, but do not have an identified successor, Alaska FarmLink can especially play a role.
We work to get land seekers on agricultural land in order to keep those soils in production and to grow our local food system. Our linking service focuses on the immediate or gradual transfer of farmland to an appropriate land seeker, but also can serve as a conduit to connect an existing farmer with a beginning farmer in order to see the farm business continue as well.
If FarmLink can help you connect with a land seeker contact Phoebe through the contact form at the bottom of the page. To learn more about farm succession planning without an identified successor read through this handbook.
More Resources to explore
Farmland Access Legal Toolkit has a library specifically on Farm Transfers. We especially recommend visiting these pages:
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- Designing a will as a part of your farm transfer plan
- Utilizing an LLC for a farm transfer for a successful gradual transfer
- Planning a long-term healthcare plan to aid in making a later transition easier
Land For Good’s Toolbox for Farm Transfer Planning
American Farmland Trust’s Farmland Information Center
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The Alaska Farmland Trust envisions a future with thriving local food markets that will give Alaskans access to fresh, healthy food, and keep our farmers farming.