Transitioning family farms to the next generation

 

Only 16.5 percent of family businesses, including family farms, survive to a third generation, according to the U.S. Small Business Administration. And 39 percent of U.S. farmland is owned by those 65 and older, with fewer than 30 percent having identified a successor.

An OSU Extension program is working to ensure smooth transitions of family farm businesses to the next generation.

David Marrison, an OSU Extension educator for Ashtabula and Trumbull counties, coordinates Building for the Successful Transition of Your Family Business.

The program consists of multiple workshops and covers such topics as family communications, next generation planning, state and federal tax laws, and business structures and transfers.

"Extension helped plant the seeds for our estate planning and gave us the resources we needed to ensure we don't lose the farm because of bad estate planning."—Roger Zeedyk, Zeedyk Family Farm 

"Strong communications are especially important," Marrison said. "While poor family communication is at the center of many farm transitions and estate transfer problems, Extension has gotten people to sit down, talk to each other, and put a plan into action."

"OSU Extension helped to ensure that the 4,000 acres of corn and soybeans we have farmed for over 40 years gets passed on to our children and to our children's children," said Roger Zeedyk, owner of Zeedyk Family Farm in Hicksville, Ohio. "Extension helped plant the seeds for our estate planning and gave us the resources we needed to ensure we don't lose the farm because of bad estate planning."

Knowledge, results, action

  • Program participants indicated improved knowledge of the following: importance of family business meetings, business transfer strategies, tax issues in farm transfers, SWOT (strengths, weaknesses, opportunities, and threats) analyses, financial issues in transferring the family business, and buy-sell agreements.
  • The program prompted results: 96 percent held an intergenerational family meeting, 89 percent met with an attorney, and 76 percent met with an accountant.
  • A survey taken 6 months after the program shows that the participants put into action the tools they learned during the workshops: 85 percent reported family discussions about business transition; 85 percent improved their communication; 81 percent started retirement planning; and 77 percent started estate planning.

Learn more …

 

 -- Tracy Turner, CommTech