WILL YOU BE READY TO EXIT ON YOUR TERMS??

Your farm is a BUSINESS.  Probably more so than you think, it is a LARGE business.  With all of the emotion that accompanies a family farm, it should still be treated just like any other business to ensure a successful Exit for the business owner.  Beyond the scope of this toolkit are tax implications for the transition of an agricultural business, however, many of the tools in this kit will assist you in developing an initial plan.  With the help of your longtime advisors, being armed with additional knowledge of personal and financial considerations, will allow you to increase the success of your Exit from the farm.

According to Pinion, a national food and ag consulting accounting firm, only 30% of all farms and agribusinesses successfully transition from the first to second generation; of those that do survive, 10% transition to a third, and of the few remaining, less than 4% make it to a fourth generation. Planning is key to increasing those percentages.

Transferring a family farm or farm business to the next generation can be a challenging task. Legal issues, tax laws, and personal differences between family members are some of the issues families must confront when deciding how to transfer the managerial and asset control of a family business.

The first question to answer is: “Do I want to pass my farm operation to my heirs as an ongoing business or do I want to pass it on as a group of assets?”  Answering this question entails a deep understanding of the wants and needs of the entire family as well as an in-depth understanding of the farm operation.

The top reasons why family businesses fail and specifically family farms, is the lack of a successor, conflict between family members or a founder doesn’t want to let go until it’s too late. This should be a 3–5-year process, the more time allowed the greater chance of success.

The common quote about Exit Planning is goes something like this: YOU MUST PLAN FOR Your Exit, it will not  “JUST HAPPEN ” BY ITSELF. Unfortunately, at some point it will, whether you are ready or not.

In addition to the resources available for small businesses in general, below is a list of resources available dealing with Agricultural business transitions.

Access to calculators and forms to continue your journey can be found here:

Owner readiness more…….

Business attractiveness more…….

Wealth Gap Calculator more……..

Continuity Form more…….

Additional educational and assistance resources can be found here:

https://nationalaglawcenter.org/

https://www.farmcreditil.com/

https://extension.illinois.edu/

https://ilsoyadvisor.com/

https://farmland.org/

https://www.farmers.gov/