Since family farms’ peak 80 years ago, the Washington Post has reported that the number of family-owned farms in the U.S. has fallen precipitously—from 6 million in the in the 1930s to around 2 million today. However, Arkansas’ family farmers heroically have resisted these trends. According to state figures, nearly 90 percent of our state’s farms are family owned, and they average about 306 acres each. If you’re like many Arkansans, that farm isn’t what you do—it’s who you are. So keeping it in the family is more than just a business plan.
Here are Some Ideas as you Weigh your Farm Succession Plan.
First, start by considering the profitability of the farm. If it’s not currently in the black, work up a business plan to turn things around. As one expert suggested, “Ask yourself, ‘What is our vision for this farm business beyond the current generation? How do we set the course for a professionally run business that will attract successors?’”
Some advisors recommend hosting a family meeting to discuss farm succession. Make sure that the family members you dream will someday run the farm, are as dedicated to that vision as you are. Don’t avoid the conversation, out of concerns they don’t want the business. It’s better to confront that issue head-on. And you never know, there may be a niece, nephew or employee who loves the farm as much as you do, and they’d be absolutely thrilled to maintain the farm just as you would.
Keep lines of communication open with everyone
Make sure that people understand your thought-processes and reasons behind your decisions. If they feel included in the process, they’ll less likely to object later on, and they may have valuable ideas for you along the way.
In particular, involve in-laws in farm succession. University of Wisconsin’s Jennifer Blazek advises: “Spouses of children need to feel involved in the process,” she says. Indeed, Arkansas is an “equitable distribution” state, which means that the presumption is marital property is divided evenly. A nasty divorce could well spoil your legacy, if you don’t take steps in advance.
In our next post, we’ll discuss some more of the nitty-gritty that you’ll need to get a succession plan started.
If you’re ready to secure the future of your farm, we’re ready to walk with you. Reach out to our experienced attorneys today, 501-221-7776.