Start structuring your succession now
The handshake agreements and unspoken decisions that ruled farmland and farm business transfer for decades no longer support today’s dairies that may involve multiple generations, farming and non-farming heirs, spouses, and complex, diverse operations. An organized approach to transition is critical to keep the business viable while providing fair inheritances.
A good way to start the process of transition in an organized manner is to utilize business structures, advised agricultural attorney Trent Hilding in a Michigan State Dairy Extension podcast. Having these in place make the gifting and sale procedures easier and allows you to use buy sell agreements, he said.
Hilding recommended establishing one entity, such as an LLC or other corporation, for the operation, and another to hold an owner’s real estate. This is because a business with a significant amount of land won’t be able to afford to give it all away, and an incoming generation won’t be able to afford to buy it all at once. Dividing the assets into separate entities gives everyone more flexibility.
July 13, 2023