G3-MR-1-Farm-transition-5by Emily Enger
Transitioning the farm is one of the hardest things a farmer does. The process is both intimidating and emotionally exhausting. Where do you start? Who do you contact? How do you talk about it with your family? These issues and more led the Land Stewardship Project in Minnesota to create the Farm Transitions Toolkit, a comprehensive, two year endeavor that now serves as a helpful, free resource to guide farmers through this tough process.
“People go through a farm transition once in their life,” said Karen Stettler, of the Land Stewardship Project. “So it’s not like you have previous experience to draw from. We’ve found that people have a lot of really good questions.”
Transitions are something people typically like to put off, but Stettler urges farmers to think about these things sooner rather than later. “Start early. Even farmers in their 50s or 60s aren’t too young to start thinking about this,” she said.
Farm transitions come with many different options, and often the first plan isn’t the one settled on. As the various parties talk things over, one or more person may change his mind or irreconcilable differences may occur. By starting the transition process early, farmers give themselves more time to find the right plan and the right person to take over their legacy.
“There might be a couple tryouts,” said Stettler. “Don’t expect it to be the first person. The sooner your time frame, the more options you have. Take your time and don’t rush the process. There’s a lot to consider and it’s a lot of new information.”
Step one
Unfortunately, there’s no magical first step to farm transitions. “That’s kind of the trouble with this process,” said Stettler. “But what would be ideal is for the family to start by working on some goals with their finances.”
Another thing to do immediately, before you take action, is to come up with your personal goals and philosophy for the land. “Really think about what you want in the long run,” urged Stettler. “What kind of legacy do you want to leave? Make sure you get that defined so you can communicate it.”
Get professional assistance
After you’ve come up with a set of goals and personal philosophies for your land, make sure you get the technical and legal assistance needed: a tax person, an attorney, a financial planner.
“There’s a reason to pay for those services,” said Stettler. “You want to make sure you’re putting together something that keeps your philosophy and legacy for the long term, done the right way.”
Often the various legal and financial advice one expert gives will contradict or alter what you worked on with a different expert. This can turn into a long cat-and-mouse game. The best way to avoid this is to arrange a time when everyone can meet together. It can be invaluable to get everyone talking in one meeting: your spouse, your heir, as well as your attorney, financial planner, and whoever else is part of the process. “This isn’t always possible for everyone,” admitted Stettler. “But if you can do it, it really helps the process.”
Like so many things in life, communication is very important within farm transitions. Be up front with your hopes and goals; don’t be afraid to say what you want. But also listen to everyone else who will be affected by the transition. “If the communication is not strong and clear, problems can ensue,” said Stettler. “Even if everything else has been worked out, lack of communication can doom a transition.”
A common communication barrier is generational issues. “The generational issues come up from each perspective,” said Stettler. “And understanding where each other is coming from is really integral.”
And then there are always times when the philosophical differences between parties is irreconcilable. “In that case,” said Stettler. “I would discourage the farmer from doing anything more than a direct sale. If people can’t come up with a common ground, life is too short to struggle through working together.”
Finding the right heir
In today’s farming scene, finding the right person to pass the farm to can be difficult. Not everyone has children who wish to take over. Is there a way to pass on your farm instead of selling it off piece by piece? Stettler says there is. In fact, young and beginning farmers’ need for land access is one of the reasons the Land Stewardship Project put the Farm Transitions Toolkit together. “Land Stewardship Project has reached out to 650 beginning farmers,” Stettler said. “We surveyed them and asked what the biggest issue was and access to land was one of them.”
Finding one of those farm-seeking beginning farmers can be done with state-by-state resources. The Land Stewardship Project has an online listing of farmers seeking land in their home state of Minnesota, and most states have some version of this. Extension services, USDA or government websites, or local agriculture groups may have similar advertisements or listings of people seeking farms. A simple Google search for beginning farmers in your state may be the simplest first step.
And as you go through the process of finding the right person, be sure and take your time. Find someone you work well with, whose principles match your own. “Being on the same philosophical page is important,” Stettler reiterated. “Having strong, like philosophies and the ability to communicate well makes for a more positive experience.”