As the average age of Nebraska’s farm and ranch operators trends older, it’s important to have a plan to pass on the family operation.
Nebraska Extension is focused on making sure those at the front line of the agriculture industry — farm and ranch families — have a plan in place for how operations will be managed for years to come.
According to Allan Vyhnalek, an extension educator focused on farm succession, roughly half of all Nebraska producers do not have a succession plan. As the average age of Nebraska’s farm and ranch operators trends older, it’s important for those operators to have a plan to pass on the family operation.
“The importance of having a farm or ranch succession plan in place cannot be overestimated,” Vyhnalek said. “These plans force operators to answer numerous questions regarding business, family, tax and legal issues, so it’s important to plan ahead.”
Nebraska Extension has developed a number of resources to support families through this decision-making process. In addition to extension educators available year-round to assist producers, workshops have been developed to help them understand the importance of developing a succession plan.
If the farm will be transitioned or succeeded to the next generation, the size of the operation needs to be considered. Most agriculture professionals estimate that an operation should be roughly 1,200 to 1,500 row crop acres to support a family. When considering a farm succession plan, not only will there need to be enough land to support the new family running the operation, but also support for the older generation in retirement. This means that crop farmers in Nebraska might need an operation of nearly 2,600 to 3,000 acres to support two families. If livestock is part of the operation, the number of farmland acres needed for the farm to succeed could be lowered.
“Unfortunately, we see some situations where two families are trying to live off an operation that’s only large enough to support one family, which can be very rough, especially with today’s commodity prices,” Vyhnalek said.
When it comes to estate planning, it’s common for older generations of Nebraskans to want to divide their land and assets equally. While it seems like a straightforward approach, this decision could have unintended consequences, Vyhnalek said. For instance, if there are four heirs of an operation, each receiving 25 percent of the assets, this division could be unequitable for the heir that has spent their whole life working on the farm or ranch.
“To treat the next generation fairly may not mean treating your children equally,” Vyhnalek said.
Nebraska Extension also offers assistance for those on the other side of a succession plan. So You’ve Inherited a Farm: Now What? is a popular workshop series for those who have recently inherited a farm or ranch but have no experience managing an operation. The workshop covers topics such as keeping or selling the farm or ranch; managing an operation; key lease provisions; legal considerations; and family communications. Vyhnalek and extension educator Jim Jansen lead the workshops, which are archived online.
“I receive phone calls from people in their 50s and 60s who have inherited land and have no idea how to manage it, because they’ve been off the farm for decades,” Vyhnalek said. “So You’ve Inherited a Farm: Now What? is designed to guide individuals through the process of managing the asset.”