Farm Business · May 2025 · 6 min read
Only 30% of family farms survive to the second generation, and just 12% make it to the third. A written succession plan built on open communication gives your operation the best chance of continuing.
Begin succession discussions at least 10 years before retirement, involving all family members—including those not returning to the farm. Hire a neutral facilitator if emotions run high. Clearly define roles, expectations, and timelines so the incoming generation can build management skills while the senior generation still provides guidance.
Work with a farm-savvy attorney to establish the right entity structure—LLC, family limited partnership, or trust—that fits your goals for asset protection, management control, and transfer flexibility. Separate land ownership from the operating entity so the farming heir can lease from siblings who inherit land but don't farm. Review and update documents every three to five years as circumstances change.
Leverage stepped-up basis at death, lifetime gifting exclusions, and installment sales to minimize transfer taxes. The current federal estate tax exemption is generous, but state-level estate taxes may apply at much lower thresholds. Consult a CPA experienced in agricultural taxation to model scenarios and ensure your plan maximizes what stays in the family.
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