By: Katie Allen, K-State Research & Extension News
The average age of a farm operator in the United States is 57 years, according to the U.S. Department of Agriculture’s latest census of agriculture. The majority of farm operators are between 45 and 64 years old, but the fastest growing group is 65 years and older.
The many farmers in their 50s and 60s remember what it was like when the farm was handed to them initially, and in earlier times, maybe not much planning had gone into the transition, said Gregg Hadley, a farm management specialist and current assistant director for agriculture, natural resources and community development for K-State Research and Extension.
"Today, a lot of farmers and ranchers are realizing, especially with the dollar amounts that the farms and ranches are worth now, that there needs to be more of a business approach to passing on the family farm or ranch," Hadley said.
Passing down the farm successfully requires much planning, Hadley said, and it’s never too early to begin the planning process. He will speak on this subject in detail at the upcoming Women Managing the Farm Conference, Feb. 13-14, at Manhattan’s Hilton Garden Inn. K-State Research and Extension is a sponsor of the conference.
Hadley said that while every farm or ranch situation is different, all should have a succession plan in place. Through his career in dealing with farm management and succession issues, he identified 10 common succession beliefs, some of which are true, while others bring forth misconceptions. The 10 common beliefs include:
1. We don’t need a detailed succession plan.
The current farm owner likely doesn’t have the same business and management philosophies as the next generation’s owner, Hadley said. The same is often true that the next generation’s owner often has different opinions. Detail is essential in making a smooth transition.
"When you disagree about a family business that could be worth millions of dollars, you need to start planning how you’re going to transfer the farm, the assets, the decision-making process and the responsibilities to the next generation," he said.
2. Most successions fail due to the lack of a good estate plan.
There are subtle differences between estate planning and succession planning, Hadley said.
"The truth is that other issues contribute to the failure of farm succession, other than the estate plan," he said. "In fact, 85 percent of the time by some research estimates, it’s not the estate plan. It has to do with family communication, relationships and business philosophy issues."
3. Estate planning is succession planning.