Almost all of us are familiar with the famous quote in “The Wizard of Oz” where Dorothy tells Toto, “I’ve got a feeling we’re not in Kansas anymore.” After an introduction to the Good Witch, Dorothy tells Toto, “Now I know we’re not in Kansas!”
The same can be said about the current state of succession planning for farmers. Gone are the days where estate taxes were minimal, there was always an heir who wanted to farm, long-term health care was a rocking chair and aspirin, and farmers didn’t need a retirement plan. Today the exact opposite is the situation.
To begin, generally Congress has been fairly generous to farmers with regard to the federal estate tax. In 2003, a husband and wife could each shield $1 million from estate taxes. In 2009, that increased to $3.5 million. However, starting in 2011, it went down to $1 million again. Debate rages as to whether or not Congress will step in and increase the number.
Who will farm?
The normal situation is that not all children wish to carry on or be a part of the family farm. Almost always someone prefers cash over owning a piece of dirt or machinery. The difficulty becomes creating 토토사이트 a succession plan that treats all heirs as fairly as possible, but ensures that the heirs who farm can continue.
Also, people live longer today, which means long-term health care is more of the norm. All of us should be well aware that long-term health care doesn’t come cheap. The challenge becomes making sure we can afford care, but not drain away the assets of the farming operation in the process.
More so today, some of us may be faced with the day when we’re simply unable to work our farming operations anymore. As a young farmer, I’m betting Social Security won’t be around when my retirement age comes. Even older farmers may be faced with this predicament. So it’s important to ensure that the farm is able to still take care of you, even when you’re no longer able to participate in the operation.
Essentially, the “imperfect storm” has come together where farming operations face the same succession difficulties other businesses have faced for a long time. Sadly, the future of farming in this country will be shaped by how well current farmers and their families plan for succession. Simply put, the number of viable farms in this country will be determined not by how successful farming operations are in terms of yields, acres, prices, and so forth, but by how well current farmers plan to transfer their farming operations to the next generation.