Family farms are a quintessential piece of the American landscape both past and present. However, the family farm is at great risk of disappearing. Half of all the farmland in the US is owned by farmers over the age of 55, and there aren’t enough new farmers entering the field.
Often these family farm properties are swept up by commercial agricultural operations at the time of sale further endangering small farms. The business of running a profitable farm is more complex than ever, especially for new farmers.
I believe that now, more than ever, there is a growing demand for financial planners who are well versed in the business of running a farm. A financial advisor can help family farms navigate changing and complex tax laws, manage and increase personal wealth and retirement savings, as well as protect the legacy of the farm with estate planning.
For many farmers, navigating the realm of taxes as a family farm can be overwhelming. It’s important to avoid a potential pitfall with proper planning. As land prices soar, tax obligations can change drastically. Another important conversation for farmers to address with their financial planner is their retirement. Often in farming, equity is held in the land and machinery. It’s less common for farmers to have financial portfolios with funds in an IRA or other savings account. Some plan to sell the farm at retirement and live off the profits, but in this day and age that is not always a viable solution. Investing in some form of retirement account as early as possible is highly recommended.
Creating a solid succession plan is the key to preserving the family legacy of a farm. An attorney and financial planner can help ensure your plan protects the transfer of wealth from one generation of the family to the next. One of the hardest parts of this process is often the conversation a family needs to have about which child if any will carry on the leadership of the farm. Too often these conversations are left until its too late, and chaos reigns. The earlier these succession decisions are decided the better. This is a great time to consult a specialist, as potential estate taxes should be carefully navigated. If there are no family heirs to leave the farm to, there are new Land Matching Programs, which are working to connect retiring farmers with new farmers who can take on ownership.
A legacy isn’t only about land ownership remaining in the family. It’s important to remember to also pass on stories of family history, ideals, and memories from one generation to the next. Family farms have a unique history, and not losing sight of the memories and stories amidst the stress of retirement and land transfer is also an important element of preservation not to be forgotten.
My goal is to make a difference for those in Agriculture; they are the backbone of our country. If you have questions, please give me a call.