Leaving a Lasting Legacy: Succession Planning for Farmers

Leaving a lasting legacy is a worthy goal for farm and ranch families, but passing an operation from one generation to the next is a daunting task that many are reluctant to tackle. Newly expanded farm succession programming aims to support families through the process and spur them into action.

The passage of the 2018 Farm Bill extended the Agricultural Mediation Program, a program that Colorado administers, which offers farm transition planning.

Colorado State University Regional Extension Specialist Jeff Tranel facilitates group meetings in Colorado and across the country. He also oversees online courses that focus on succession management to assist producers and meets with families who have difficulty determining what their farm or ranch legacy should look like.

See more: Handing Over the Reins to the Next Generation of Farmers

The Importance of Communication

“We as humans are not great communicators with our family members talking about the difficult issues,” Tranel says. “Every family has topics that they don’t talk about. We don’t want to talk about our own deaths. We have to let go of control as we age, let the next generation take over. It’s meshing those two different objectives of the retiring generation and the succeeding generation to come to some conclusion.”

Group meetings are informational and educational, with lots of discussion. They focus on four pillars of a lasting legacy: passing on one’s values and life lessons, talking about personal possessions of emotional value, detailing a person’s last wishes and final instructions, and taking inventory of real estate and financial assets.

“It’s difficult for parents to choose a successor of the business,” Tranel says. “Typically farms and ranches can only generate funds sufficient to pay one family. But choosing one out of your children is almost antihuman. Most families want to be fair to all of their children with their wealth. They want to split it up equally, or equitably. Equitably would be taking into account differences of the children – their interests, their financial wherewithal, their ability to care for elderly parents. It’s choosing the successor and then defining fair for that family.”

See more: Keeping the Farm

Smooth Transitions

Tranel shares the example of one family who worked for three years to move the father from full financial and managerial responsibility into a mentoring role, first relinquishing smaller tasks to his son and eventually more significant decisions and financial obligations. Tranel helped the family to set specific deadlines for the transition and encouraged the father to allow his son to experience his own successes and failures.

In another instance, a family had defined one son as the successor of the farm, only to find out that another son was also interested in continuing the operation.

The importance of succession planning cannot be understated. The Colorado Department of Agriculture (CDA) is partnering with Colorado State University Extension service to build a statewide network and reach more farm and ranch families, especially as the average age of producers continues to rise.

“For many producers, this has been their lifelong investment,” said Mark Gallegos, who leads CDA’s Agricultural Mediation Program. “It’s their life, it’s their business, and it defines who they are. It’s just sad to hear those circumstances where someone has passed on and nothing is set in place. Then the operation has to be split apart and no one really comes out to where they’re still operating that farm or that ranch.”

Goals for the expanded program include increasing the number of farm and ranch families that begin, and hopefully complete, the process of succession or estate planning. That means successfully transferring the business to the next generation, in many cases. The CDA program is part of a nationwide grant with 38 other states that will also have the ability to provide this service to farm and ranch families.

See more: How Generations of Growth Thrive at Jones Family Farms

How to Start Succession Planning:

1. Start planning sooner rather than later
2. Schedule a family meeting to start the conversation
3. Make a list of assets and a list of debts
4. Set goals for the future of the farm
5. Set a timeline
6. Gather important documents
7. Ask for help from experts