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Farm Estate and Succession Planning

RSS By: Andrew Zenk

This blog focuses on making complex and difficult topics in estate and business planning understandable and applicable to the reader.

Andy is an Agribusiness Consultant for AgCountry Farm Credit Services, Fargo N.D., a farmer owned cooperative and part of the Farm Credit System serving eastern North Dakota and northwest and west central Minnesota.

Maximizing Opportunities for the Future

Jun 06, 2011

As a farmer, you know first hand how important it is to "maximize opportunities." You work long hours at this in all areas of your farm. The examples are wide ranged. Often, a farmer’s focus on maximizing opportunities includes the following: maximize your productivity of your acres in each year’s crop plan; maximize the opportunities you have by knowing exactly where your operation’s break-even points are and how to effectively market and implement a crop insurance plan to take full advantage of your profitability; and maximize your opportunities each year with effective records and tax planning. 

With all of the areas you "maximize opportunities," does your annual list include the need to maximize your opportunities for the future of your farm? Do you think about how what you do today will help you in the future when the time comes to transition your farming operation? Often, plans that maximize opportunities for today hinder the options you have for the future. This conflict creates a difficult situation, one that cannot be overlooked. 
 
Hockey legend Wayne "The Great One" Gretzky once said something that rings very true to the importance of maximizing your opportunities for the future. Gretzky was asked a question on his key to success as a hockey player. His response was so simple, yet so profound. He said "A good hockey player plays where the puck is. A great hockey player plays where the puck is going to be."  It is crucial that you think about what you can do to help you "skate where the puck is going to be" in your farming career. 
 
You may think that your career will lead you to a reality where "success in the future" works itself out. That may be, and I hope you are right. On the other hand, many times those who disregard the need to plan for the future find themselves in a reality where they have closed the door on many opportunities that once were available. Actions they took years ago have closed the door on being able to retire at a time that they are ready. They have closed the door on being able to bring the next generation into the farm, no matter how much they want to. They have died untimely and burdened their family with unnecessary estate taxes and administration costs and left them with a difficult financial situation. These are grim thoughts, but none of this has to be. Planning for the future can help change your eventual reality to your advantage. 
 
Think of it this way. Those of us who work for someone else and depend on a wage for their living have one of two options when it comes to the future. There are basically two options for wage earners. You can plan for retirement, or you can not. Regardless of what path is chosen, one thing is certain: there will come a time when a wage earner is no longer able to work to earn a living. At that point, their independence and ability to live as they want depends on what track they took to prepare for that point. Those who planned for the future likely have a reality of independence and enjoyment of life. Those who did not, likely have a different outcome at that time. 
 
Farmers, as self employed individuals, have the same two basic options. Those who plan for the future have many opportunities to plan for a secure and independent future. They are often at a point where they control their destiny and their independence. Those who do not plan likely face a different reality. Their choice led them to a point where they are faced with difficulties such as overwhelming debt or tax issues that control their lives. What reality do you want? 
 

None of us know when our time is up on this earth, or when we will no longer be able to earn a living. A crystal ball would be nice, but that is not reality. Reality requires that we plan for the "now", maximizing our opportunities to ensure for a secure future for you and your family, regardless of where you are in life. Whether you are just starting out, working to expand, or working to retire, there are benefits to develop a plan that incorporates maximizing your opportunities for the future. I encourage you to add this to the list of ways you maximize your opportunities.

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Disclaimer: The information contained in this publication provides a general overview on various topics and is strictly for informational purposes only. The reader should consult a qualified professional for advice based on his/her specific circumstances. AgCountry Farm Credit Services and the writer of this blog make no representations as to the accuracy or completeness of any information on this site or found by following any link on this site, and shall not be liable for any errors or omissions herein or for any losses or damages resulting from the display or use of this information. 

Required Disclosure Pursuant to IRS Circular 230: Pursuant to requirements imposed by the Internal Revenue Service, any tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (1) avoiding penalties under the Internal Revenue Code; or (2) promoting, marketing or recommending to another party any transaction or matter addressed in this communication.
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