Are you thinking of transitioning your farm from one owner or generation to the next? Ideally, you want to think ahead so you’ll feel prepared and proactive, rather than feel like you’re just responding to challenges as they arise. Succession planning is a helpful tool to help you plan for the successful transfer of ownership, management, knowledge, labour and skills of the farm to the new owner.
Perhaps you wonder how your farm will continue after you retire, or how you’ll even be able to retire from working long days on your operation. Maybe you’re the next generation, wondering how you’ll finance the transition as you take over the family farm. Or it might be that you’ve already transitioned, but you need to expand the farm as your goals change.
Many people find it difficult to think about transitioning the farm to the next generation, whether they’re inheriting the family farm or passing it on. But it’s not as hard as you imagine, especially if you have a plan that is uniquely yours. Here are a few tips for effective succession planning.
1. Create a Plan Early
The best thing you can do to prepare for a transition is to start early. Planning will look different for every farm, but if you own a farm and have adult children, you should have a plan.
- Determine how much money you’ll need to fund your style of living
- Assess your farm’s profitability to ensure your needs will be met
- Make sure you have a will
- Involve key advisors in the process (accountants, bankers, lawyers, financial advisors)
- Document your plan and keep a copy on file
2. Review Your Plan Often
You should review your plan on a regular basis, at least annually.
- Review your plan during annual reviews with your bank or accountant
- Determine and document whether anything has changed for you or your family
- Assess if there have been any industry changes that might affect your plan
- Review any tax changes that could have significant financial implications
3. Revise Your Plan As Needed
Your plan is a living, breathing document that’s meant to adapt to changing needs.
- Update your plan as your life and farming situations change
- Don’t be afraid to make significant adjustments to your plan if there are major changes
- Document any updates
- Communicate your changes with family members and key advisors
Farm succession means transitioning the success and legacy of the family farm from one generation to the next. Succession planning is a tool to ensure your family’s vision for the farm will be understood and shared for the future. Having a plan in place gives everyone an anchor and a reference to revisit as your farm—and legacy—grows and evolves.
Check out our Agriculture Hub for more resources on farm transition.
Questions? Get in touch
If you have any questions about transitioning your farm or would like to talk to any of our ag experts, we’d be happy to speak with you. Fill out the form below and our ag team will be in touch.