From staff reports Without a succession plan, farms and ranches could fall apart when passing to the next generation, warns one Oklahoma State University agricultural economics professor.
Dr. Shannon Ferrell outlined the importance of proactive planning as he reviewed a presentation that he gave at the American Angus Convention in Fort Worth, Texas.
He noted two issues: the increasing median age of agricultural producers nationwide, and the estimates that suggest $1 trillion in agricultural assets will need to be transferred to the next generation within 20 years.
Because many farms and ranches have failed to fully plan ahead, Ferrell estimates that only 30% of family-owned businesses will survive succession intact. Currently, 64% of farms and ranches have no estate plan.
“You really have to do something,” he said. “You have to be proactive, otherwise, a lot of forces are working to pull your ranch apart as it makes that transition.”
Many people assume that they will have to pay an estate tax, when in reality, only estates worth over $13 million are subject to it [estate tax]. Ferrell urged anxious farmers and ranchers to not let fear drive their operational decisions.
No matter the situation, Ferrell advises having these safeguards in place:
• Parents with minor children need a guardian nomination on record.
• Those with investment accounts should make use of beneficiary designations.
• Powers of attorney for business and healthcare decisions.
• Advanced directives on palliative care and organ donation decisions.
• A will to designate their property after their death.
In addition, “Do a deep-dive inventory of all of the assets you have,” Ferrell said. “Land deeds, business records, investment accounts, and put it all together in one place.”
Having all documents ready before meeting with lawyers and/or accountants should save time and money, Ferrell concluded.