Transitioning a family farm from one generation to the next can be assisted with a written plan of action. Because each farm family has unique needs and issues, each family business transition plan is different. This makes it impossible to develop one plan that fits all, or even most situations.
A good action step is to attend a farm business transition meeting in your area, often hosted by university extension staff. Group meetings are often helpful, as they allow individuals to interact with others in various stages of the business succession process.
One very important foundational step is building the detailed farm business inventory of assets and liabilities (balance sheet or net worth statement). A good habit to form is building an inventory on the same date each year and updating it yearly.
The balance sheet provides a place for current, intermediate and long-term assets along with the current, intermediate and long-term liabilities. One problem that is identified on many farms is the lack of current balance sheet reports. It is recommended your farm has one on file every year on Dec. 31.
Dennis Stein with Michigan State University Extension recommends these steps to get your farm transition plan in place:
1. Complete essential paperwork – a will and/or trust.
2. Make sure you are maintaining a current and very detailed balance sheet inventory.
3. Are members of the family farm business setting goals?
4. Develop a vision for the farm business that focuses to a transition plan.
5. Balance farm and non-farm issues that impact the farm business transition.