Seedstock EDGE, the official publication of the National Swine Registry, is published nine times per year and distributed to 45 states. It promotes breeders’ genetics, reports show and sale results, and offers the latest tips and trends in agribusiness. This fall, Seedstock EDGE published an article called “Leaving a Legacy”, the first in a three-part series about farm succession planning. The publication interviewed attorney Kyle Mandeville for the article, in which he offers some points to consider when establishing a farm estate plan.
Where to start
The first step in setting up a succession plan is to take inventory of assets and liabilities. When meeting with clients, Kyle recommends they bring:
- a summary of their goals,
- a balance sheet,
- a list of assets and the ownership of those assets,
- the basis, or amount of capital investment, on the property and equipment, and
- a list of outstanding debt on assets, as well as who owns the debt.
“The current ownership of farm assets could determine the heir of a specific farm, without a comprehensive estate plan,” Kyle said.
Sit down and talk
Because family members might have different goals, and because farm succession conversations can evoke a myriad of emotions, Kyle encourages his clients to have sit-down, face-to-face discussions with family members. He also advises the senior generation to solidify their goals before incorporating the goals of their children. “Family communication can drastically change the approach of the family and the direction where the farm is going,” he said. “In the end, it’s about respect and knowing how to best communicate with each member of your family and the farming operation.”
Bringing in the next generation
One way to encourage younger individuals to operate the family farm is for the senior generation to mentor the next generation. Another way is to use business entities. Kyle assists in establishing limited liability companies (LLCs) and corporations. These allow parents to continue the operation as part of a company that can later be passed on to their children in shares.
Fair isn’t always equal
As the article states, “… one of the most challenging questions in farm succession and estate planning is how to handle off-farm heirs.” While parents always want to be fair to their children, “fair” — as Kyle said — “doesn’t always mean equal.” Kyle explains that farm assets should be separate from personal assets, and he notes a trend where the senior generation passes its legacy to off-farm heirs in the forms of ownership of farm ground holding companies and leaves the farmer operation to the on-farm heirs. “The goal is not always to be happy, but fair,” he said. “… Parents always want what is best for their family.”
To read “Leaving a Legacy” in its entirety, click here. You can also view past issues of Seedstock EDGE on their website, or order a subscription. To learn more about how to set up a farm estate plan, contact Kyle Mandeville at 765-742-9066.
The content of this blog is intended to be general and informational in nature. It is advertising material and is not intended to be, nor is it, legal advice to or for any particular person, case, or circumstance. Each situation is different, and you should consult an attorney if you have any questions about your situation.