Set These 2 Goals When Succession Planning

There are two sets of goals to establish when succession planning:

• goals related to the future of your ag operation

• goals related to your own retirement

In the free guide Succession Planning 101 from FBN® Finance, we walk you through the business logistics of protecting your farm’s future while simultaneously helping you keep an eye on what you personally will need in retirement. Download the guide here, and continue reading below.

Establishing Your Ag Operation Goals

Determine what matters most to you when it comes to the future of your estate. A few questions you may want to ask yourself include:

Is your priority to keep the farm within the family?

If your goal is to keep your ag operation within the family, you’ll need to determine if your family has the same vision and skill set.

How will you address if only some of your children want to keep up the operation or if all of them do but are not interested in working together as a team? If you do not have children interested in maintaining the farm, do you have a cousin, niece, or other interested family member of working age you would entrust your estate to? Are there any expectations or conflicts within the family that need to be resolved?

Is your priority to make a profit off the farm?

If you prefer to use the farm to finance your retirement, you can consider whether you’re interested in renting the land or selling it.

Renting can be more of a time investment, but could be a good option if land rates are currently low; even if you go this route, though, you will still need to name a successor. If you plan to sell, consider whether there are any repairs or upgrades you’ll need to make on your property in order to achieve a higher rate of return.

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Establishing Your Retirement Goals

While succession-planning discussions primarily focus on the future of your farm, prioritize discussions regarding your personal future so that you can better secure the retirement you envision.

Who may need to rely on you during your retirement?

If you have a spouse, factor in their retirement desires, needs, and contributions, ensuring that they are part of all succession-planning discussions and that they have legal rights to assets not gifted or sold should they outlive you.

Likewise, if you have any dependents, such as a severely disabled adult child, you will need to plan for their financial future as well as who will become their legal guardian when you are no longer able to care for them.

What will you need for retirement from the farm’s assets?

You may have been investing in a retirement plan throughout your working career and have enough saved to retire comfortably. Or, you may be part of the 60% of farmers who did not contribute to a retirement plan. How much, if any, will you need from either a stake in the profits or the sale of the property?

What provisions do you want to negotiate for yourself?

If you’re keeping the farm within the family, will you continue living on the farm property, and if so what financial obligations will you have for doing so? If you negotiate for a financial stake in the ag operation, how much authority will you have in operational decisions after you execute your succession plan?

What long-term care needs will you potentially require?

Research your options and budget for healthcare, such as Medicare, keeping in mind that you may have greater expenses as you age. If you are intending on staying on the farm property, you may need to consider whether you need to move out of the main residence and build a new residence and whether it needs to be made more accessible in case mobility becomes an issue in the future.

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