My wife and I are in our late 50s. We have a sizable operation. There is no one who will want to carry on the farm operation. As another spring approaches, it reminds us we won’t be farming forever. When should we think about phasing out, and how should we go about it?
The Profit Planners panel answering this question includes: David Erickson, farmer, Altona, Ill.; Mark Evans, Purdue University Extension educator, Putnam County, Ind.; Steve Myers, farm manager, Busey Ag Resources, Leroy, Ill.; and Chris Parker, livestock and forage producer, Morgan County, Ind.
Erickson: You suggest that there are no family members with an interest in continuing the business. I bet there are plenty of people interested in your farming business. First, decide if you want someone to continue your business, or if you prefer to sell out and find a tenant to rent your farmland. This key decision is pivotal in setting the direction of your business and your participation in its future success. Consider offering a young farmer or farm couple employment that could lead to ownership for them and a great sense of pride for you through the mentoring experience.
Evans: There are many succession and estate planning programs offered by Extension. Attend these to gain ideas and questions to consider. You may or may not care about your farm operation, and care if it continues in good hands, even if not in the family. If your health is good and you’re enjoying life, there’s no reason that 62 or 65 means you should give it all up. Yet you may want to slow down.
If your operation includes livestock, the normal progression is to phase out of livestock first. If not, perhaps you could work with someone to share-crop while staying involved and gaining the relationship with someone appropriate to take the operation on while ownership stays in the family.
If you have children, there are many estate planning variables to consider. One option would be to put the farm in a trust, with the ongoing income being for your children after you pass on. Another option would be selling the entire operation at some point, and deciding how you want to transfer the assets.
Myers: This is a huge animal to get your hands around. Begin those discussions immediately. Start with family, making no assumptions. If they’re not interested, ask yourself, best-case scenario, what you would like to see happen. Seek advice from people who know your business best, such as your accountant or attorney. By starting early, it allows you more options and the time to flesh out details. Start now.
Parker: Think about the phasing out process right now, and start the long-term plans for it. One method I’ve seen used successfully is to contact a neighboring farmer with a young son in his operation, and discuss with them the incorporation of your farm into their operation. Doing this transition in sequential steps over the next few years is sometimes preferable.
Summing up: Consider all options. Whatever you do, start now!