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Farm Succession

Establishing a comprehensive plan for farming succession is crucial to ensure the continued success of your estate or business. This guide by Julie M. Karavas, J.D., LLM, provides essential steps, conversation starters, and strategies for effective succession planning, including family meetings, goal-setting, plan preparation, and implementation. Learn how to navigate the complexities of estate planning, tax implications, and generational transitions to secure the future of your farm or ranch operation. Take proactive steps now to avoid potential conflicts and setbacks. Begin the conversation today for a sustainable tomorrow.

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Farm Succession

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  1. Farm Succession Starting the Conversation

  2. Julie M. Karavas, J.D., LLM- TaxKaravas & Kranz, PCColorado - Nebraska Estate, Succession, Business Planning Real Estate – Land, Minerals Wills, Trusts, Probate, Succession Tax Entity Formation and Operation Transaction and Litigation

  3. Succession Planning Doing nothing is a disaster waiting to happen

  4. Succession Planning Steps • Start the Conversation • Family Meeting • Set Goals • Determine Common Objectives • Prepare a Plan • Implement the Plan • Annual Review

  5. Start the Conversation Step one – get family members to talk about their individual goals

  6. Conversation Starters • ACTIVE Participation • Are you interested in participating in the family farm/ranch operation? • If yes, in what capacity? • Are you prepared to assume that role? • Do you need training or other resources? • Are you willing to invest your own funds in order to buy-in/continue? • Do you think there should be a limit as to who can be actively involved to avoid dilution of ownership – and minimize family dynamics? • Have you considered the difference between management and ownership?

  7. Conversation Starters, con’t • PASSIVE Involvement • Should family members not actively involved be able to have an ownership interest? • Even if you don’t want to actively participate, do you want the operation to continue? • Are you willing to invest your own funds in the operation to get an ownership interest? • Do you prefer the operation be liquidated and the net proceeds distributed? • Even if you don’t want to participate or invest, do you support the continuation if your share can be cashed out to you?

  8. Family Meeting Effective succession planning will involve family meeting(s).

  9. Agenda for Family Meeting • Purpose of Meeting • Mom & Dad’s Retirement Goals • Mom & Dad’s financial situation – personal/business • Succession Issues • Family Input (*Think – Conversation Starter items) • Estate Planning for Mom & Dad, and younger generation start to think • Value of estate / Preservation of assets • Tax liability issues • Reconcile estate plan and succession/business plan

  10. Set Goals Intent – Goals - Action

  11. Set GoalsDefine and Clarify the Goals • Integrity of Operation • Management/ownership • Financial Security • Reconcile family/operation • Prepare the Next Generation of Leaders • Written plans/contingencies

  12. Determine Common Objectives Consider the goals defined. What are the common goals of all / most family members?

  13. Prepare a Plan Preliminary Plan Final Plan

  14. Prepare a Plan • Professional Team of Advisors • Reconcile Estate Plan and Operation Succession Plan • Not a One-Size-Fits-All Plan • Think: What will work for the next 3-5 years…

  15. Implement the Plan From Theory to Application

  16. Implement the Plan • Ownership Transition • Respecting the Common Goals • Management • Contingencies

  17. Annual Review Nothing is set in stone

  18. Annual Review • Family Dynamics • Business / Operation Changes • Industry Regulations • Tax Law Changes • Need for Business Purpose • Flexibility and Contingencies

  19. Succession Planning is Planning for Success Doing nothing is a disaster waiting to happen. Get over the intimidation factor and start the conversation. Nothing worthwhile is easy…

  20. Julie M. Karavas, J.D., LLM-TaxKaravas & Kranz, P.C.Colorado & Nebraskajulie@jkklegal.comoffices -720.943.1095/ 402.423.9455 cell – 402.430.8802 Estate, Succession, Business Planning Real Estate – Land, Minerals Wills, Trusts, Probate, Succession Tax Entity Formation and Operation Transaction and Litigation

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