Farm Succession: First Steps in Creating a Smooth Transition

By Chad Chase, JD, CTFA and Lindsay Adams, CFP®

Are you a farmer in need of a plan to transition your farm to the next generation? A well-crafted succession plan is crucial for preserving your legacy and helping to solidify the continued prosperity of your farm.

In this quick video, we discuss the essential first steps to creating a succession plan. We cover topics such as why it’s so crucial to work with a professional and what’s involved in the first steps.

Transcript

Introduction to Farm Succession Planning

Lindsay Adams: For ranchers and farmers, having a well-thought-out plan is crucial for passing assets on to the next generation. But it can often be a complex process that requires the knowledge and experience of a team of trusted professionals. Are you prepared for a smooth transition to the next generation? Hi, I'm Lindsay Adams.

Chad Chase: And I'm Chad Chase, and we're financial advisors at CGN Advisors. Today, we're going to share why it's so important to have an experienced professional in your corner and the first steps of developing a succession process. So Lindsay, as a Certified Financial Planner and a Certified Farming Succession Coordinator, what unique approach do you bring to farm succession planning?

The Approach of a Certified Farm Succession Coordinator

Lindsay Adams: A couple of things. First, I'm proud to say my family background is firmly rooted in the farming community. Both my parents and my grandparents are farmers, so I grew up around farming. As an adult, I combined my farming background with my love of finance. I'm currently one of only three individuals with a Certified Farm Succession Coordinator certificate in the state of Kansas.

Chad Chase: That's great. So, okay, when you work with a farm family, as they start to think about succession planning, what's that process? What's that first step?

First Steps in the Farm Succession Process

Lindsay Adams: One of the first things I like to do is to ask them to think about what they envision the farm being like in five to ten years and beyond. I also ask, who's currently involved and needs to be part of the succession conversation? Because yes, mom and dad can make all the plans in the world, but if the next generation doesn't like their decisions or doesn't agree, that needs to be addressed and hopefully resolved. So clarifying up front who should be involved in the conversation and their roles is crucial because it determines the level of their involvement in the planning process.

Chad Chase: That makes total sense. Then after you've discussed the players and their roles, then what's next?

Lindsay Adams: The next thing I do is get a solid understanding of what the first generation, usually the parents, want their lives to look like once they transition out of full-time farming. For me, this provides a starting point for the succession plan. For example, some farmers want to immediately and completely retire from farming because they have other revenue streams to support their retirement, whereas other farmers want to retire bit by bit and stay involved as long as possible. Maybe their revenue streams are more essential to their retirement plan and they're not quite ready to pass them on. In this case, it's important to discuss a plan that lets the next generation gradually take on more and more responsibility instead of all at once. So it all depends on that first generation's retirement plan. Once that's defined, it better determines how we proceed.

Involving Outside Professionals in Farm Succession

Chad Chase: We already mentioned who from the farm side should be involved in succession planning, but what outside professionals should also be included?

Lindsay Adams: Typically, farm families are already working with professionals like estate planning attorneys, accountants, and their lenders. All these people definitely need to be involved in the succession planning process. As a certified farm succession coordinator, part of my role is to make sure they're all working together effectively.

The Importance of Working with a Farm Succession Coordinator

Chad Chase: Lastly, why is it important to work with a farm succession coordinator?

Lindsay Adams: I believe it's important to find somebody who truly understands the hardships of farming, the closeness of farming, and someone who can really talk through all of the options as well as the potential snags they could run into. Farm families need to work with someone who understands what the true goals are for keeping the family together and passing on the farm. Helping families maintain a good relationship with one another is one of my biggest goals.

Chad Chase: Well, thank you, Lindsay. That's great. The whole CG Advisors team is here to help you with your farm succession plan. To schedule a meeting, call our Manhattan office at 785-340-3434 or our Rogers, Arkansas office at 479-335-1034. Thanks for watching.