Succession on the Farm: Working the Middle

Nine-year-old Ryan Panbecker is everywhere on the Iowa farm this warm October day. He’s helping get tools out the back of the pickup or running through the stubble of just-harvested corn. If enthusiasm is any indication, Ryan appears destined to take over the family operation, but not for another decade or more down the road.

Already, 9-year-old Ryan does a few chores with Granddad.

The trick is to bridge that time somehow by keeping the farm operating in the family, while allowing Ryan’s grandfather, Elroy, who is 69, to transition into retirement. Elroy’s son and Ryan’s father, Terry Panbecker, is the director of the precision agronomic division for a Fort Dodge, Iowa-based agricultural cooperative. Terry is also a former AGCO employee, who, along with his dad, continues to use the company’s farm equipment, including a Massey Ferguson 8680 tractor and Gleaner R65 combine.

Transition Advice
There are no statistics as to how many farmers keep working to give heirs time to become adults or to acquire the means to buy them out. Still, while Terry’s situation does make the succession planning a bit more complicated—he plans to continue in his full-time off-farm role while devoting off-hours to the family farm—transition advice is much the same for the Panbeckers as other farmers.

For instance, succession and estate planning experts recommend that goals for the operation be established that take the entire family into account. Everyone involved should list personal, family, business and retirement goals.

“Give yourself the benefit of 10 years to make the transition,” says Joel Green, an attorney with St. Louis-based Aegis Professional Services. “We can do a lot in terms of estate planning with that kind of time frame,” he says.

Attorney Hannon Ford often recommends the use of a living trust into which someone like Elroy Panbecker could place all his assets. Often, the size and complexity of the operation, as well as escalating land values, dictate family limited partnerships or family limited liability companies.

In the case of the Panbeckers, the creator of the living trust can require that the farm not be sold during the next 20 years, for instance. Additionally, the Panbeckers could use a limited liability company, or LLC, to own the assets of the farm—even within the living trust.

In the meantime, Elroy plans to continue farming full time for at least the near term, while Terry holds down his “day job” and gladly works the farm whenever needed. In the not-so-distant future, however, Ryan and/or his sister Nicole may take over the operation. Yet for now, they’re pretty content fetching tools, running through farm fields, learning the ropes on the farm that could one day be theirs, and generally getting to spend time with Dad and Granddad.

For more, see http://www.myfarmlife.com/features/succession-on-the-farm-working-the-middle/.