Building the right business structure for your farm.
How can forming a business entity help me pass my farm to a successor?
A well-planned business entity can ease succession planning for your farm. Having a formal business entity provides the opportunity to plan a clear process with a clear set of ground rules for how the transition will take place. Also, a formal business structure allows you to transfer the business as a whole, not just individual assets.
If you’re thinking about using a business entity—or creating a new one—to ease the transfer of the farm to your children, you’ll want to ask important questions now. Some of these questions will be about your vision, the big picture: Is your ultimate goal to establish an inheritance for your kids? What values do you want to make sure your farm reflects? Other questions will be financial and logistical: What are your assets? What debts does (or will) your business carry? What paperwork and record-keeping is required for the business you want to create or maintain? Attorneys and accountants can offer good advice on maintaining compliance with the law and providing for the payment of the estate’s taxes, debts, and expenses.
FOR MORE INFORMATION: Farm Commons’ Succession Planning tipsheet contains lists and graphs to help with questions ranging from overall farm vision to retirement budgets and the long-term protection of business partners’ interests. And if you decide to form a new business, other resources listed in this FAQ will all be useful.