A Guide to Transitioning Farmland to the Next Generation

By Jason J. Lestina, ALC, AFM

Farm Manager and Real Estate Broker at Land Pro LLC



Transitioning farmland from one generation to the next is a challenge many farmers and their families face. Whether it is land that has been passed down through the generations or investment land, it is important to consider the unique and complex legal and financial decisions that must be made when passing on farmland.

As a farmer, you've worked hard to build a successful business and cultivate your land. It's natural to want to ensure that your farm continues to thrive for generations to come. This is where succession planning comes into play. Succession planning is the process of transitioning farm ownership and management from one generation to the next.

Many farmers may be reluctant to start this process, as it can be uncomfortable to confront the idea of relinquishing land ownership and farm management. However, succession planning is crucial for several reasons.

Firstly, without a clear succession plan, family conflicts can arise when it comes time to transfer land ownership and farm management. This can result in costly legal battles, loss of farm productivity, and irreparable damage to family relationships.

Secondly, succession planning helps ensure the continued success of your farm business. Your farm may be your life's work, and you likely have specific goals for its future. By developing a clear plan for the next generation, you can ensure that these goals are carried on.

Finally, succession planning is an opportunity to preserve the family farm legacy. The family farm has a rich history in America and passing it down to future generations ensures that this tradition continues.

The first step in any succession plan is to create an estate plan. This plan outlines what will happen to the farmland and any other assets after the current owner passes away. The estate plan will also outline who will be responsible for managing the land and other assets.

Many farm operations are structured as sole proprietorships or partnerships. When transitioning farmland to the next generation, it is important to consider whether the current business entity is the most appropriate for the future operation. An LLC or other type of business entity may be more appropriate for the new operation.

Transferring farmland can also have significant tax implications. It is important to consult with an accountant or tax professional to understand how the transfer of ownership will impact the current owner’s taxes and the taxes of the new owner.

There are several legal documents that may be necessary when transferring farmland, including deeds, contracts, and other legal agreements. It is important to consult with an attorney to ensure that all necessary legal documents are in place.

You’ll also want to evaluate potential successors, especially if farm management is involved. While anyone can call themselves a Farm Manager, at Land Pro LLC we are experienced and professionally trained Accredited Farm Managers who work on behalf of the families’ best interest. It's essential to choose someone who has the right skills, education, training, experience and passion for farming, and who is willing and able to take on the responsibilities of farm management.

Before you can evaluate potential successors, it's important to establish clear criteria for the role. You should consider the experience and knowledge required to manage the farm, as well as any other qualities or values that are important to you.

You might prioritize someone who is committed to sustainable agriculture practices, or who has experience with animal husbandry. Once you have established your criteria, you can begin evaluating potential successors. This may involve reviewing resumes and conducting interviews, but it's also important to observe the candidates in action. You might invite them to spend time on the farm with you or ask them to work on a small project or assignment to demonstrate their skills.

In addition to evaluating technical skills and knowledge, it's important to assess the candidate's fit with your family and the broader community. Transitioning farmland can be a complex and emotional process, and you want to choose someone who will work well with others and respect your traditions and values.

With the right successor in place, you can ensure that your farm and legacy continue for generations to come. With proper planning and guidance, the transition can be a smooth and successful process that ensures the future of the farm for generations to come.