Working on the next moves in the succession planning process are Leon Knirk (left) and Barry Ward of Ohio State University.
Plan the work and work the plan: That sums up Leon Knirk’s mind-set as he began the transition from professional golfer to farmer nearly 10 years ago.
Today, Knirk, a third-generation family farmer, is in charge of all the day-to-day financial and management decisions for his family’s 2,000-acre grain and livestock operation near Quincy, in south-central Michigan.
Knirk says having a solid plan to follow helped make the tran-sition successful. He also credits his father, Dick, for offering him the farming opportunity in the first place.
“It’s not been easy at times, but my dad’s managed to let go and let me take over the reins,” says Knirk, who participates in Farm Journal’s Ultimate Farm Quest effort.
The entire transition process took nearly a decade for the two men to complete. That kind of time frame is not unusual, according to Kevin Spafford, the succession planning expert who spearheads the Farm Journal Legacy Project. “Establishing and implementing a comprehensive transition plan can easily take two to three years and often stretches into several more years as refinements take place,” Spafford explains. “It is a dynamic process that needs to continue year after year as the operation and the family evolve.”
As part of the Ultimate Farm Quest program, which is designed to help successful farmers take their operation to a higher level of success, the Knirks have been working with Barry Ward, Ohio State University farm business management specialist. “The Knirks have done an exceptional job,” Ward says. “Doing a good job of getting the next generation on-board and increasing their stake in the farm operation takes time.”
Ward says he typically works with farmers to address two distinct types of succession planning: estate planning and transition planning.
“When we talk about estate planning, we’re discussing the dollars and cents aspect of the operation,” he says.
That means setting up assets to pass properly from the older generation to the younger generation and, in the process, effectively managing the potential tax burden.
Transition planning involves more of what Ward calls the philosophical management aspects of the farm.
“That’s the plan that enables us to pass along nontangible things that are important to the farm operation, such as business relationships the older generation has maintained for years but needs to pass along to the younger generation,” he explains.
Build a team. Gary Hachfeld, University of Minnesota Extension educator, encourages farmers to seek good counsel for succession planning. In addition to consultants and Extension personnel who specialize in agricultural succession planning, the Farm Journal Legacy Project offers insight, planning tools and other resources (see www.FarmJournalLegacyProject.com).
“Do your homework before you hire anyone; interview them and ask lots of questions,” Hachfeld says. He mentions that most legal firms provide a free one-hour consultation, and he encourages farmers to use that benefit to educate themselves.
- December 2010