How to Create a Farm Transition Plan April 6, 2021 As you consider hanging up the boots and retiring, it’s important to have a farm transition plan in place. If you’re planning to retire or simply want to be prepared, consider these steps when starting on a farm transition plan. Step 1: Consider Getting Life Insurance Even if you don’t believe an extensive farm transition plan is necessary, consider purchasing life insurance. According to the 2020 Insurance Barometer study, 40% of people who have life insurance wish they had purchased it earlier in life. Life insurance can help your family in the event of the unexpected, leaving them more equipped to take care of themselves. Step 2: Define Specific Goals for Your Transition Plan Begin discussing how to transition assets and property over to the next generation. Also, take some time to evaluate all assets, sources of income and establishing goals. To help, start with thinking about some of these questions: What do my loved ones need to live if I’m not there to support them? (Consider using OKFB’s life insurance calculator to help determine the appropriate amount.) What passive income sources (rental properties or machinery, cell towers, etc.) do I have that I need to sustain my family through retirement? What stipulations or requirements do I have for the new manager of my property and assets? With these questions in mind, start to establish some goals for transitioning over these important assets. Step 3: Define Your Successor(s) in Your Farm Transition Plan One of the most difficult topics to discuss is who will take over your farm or ranch. Choosing the right person to take over the business, finances and additional assets is a monumental and critical task. Additionally, there are many approaches you can take when deciding a successor and how to divide up assets. With multiple heirs, one approach is to split everything evenly, or determine what is fair and best for each. When considering the division of multiple types of assets i.e., finances, income, the management of property and livestock, etc. — take some time to drop them into a will or other legal document that specifically outlines the details. Step 4: Strategically Assemble Your Farm Transition Plan Now that goals are set, along with who is taking over the finances, responsibilities and the assets, it’s time to think strategically about how to transition these assets. There are many approaches, but the two most common are giving the assets as gifts or transferring them through a will. With either approach, consider consulting with legal, tax and insurance professionals. It’s important to understand the potential benefits and drawbacks through transferring assets through either approach. Planning to transition your life’s work can feel like a daunting task. At Oklahoma Farm Bureau Insurance, our agents are here to help you navigate all the intricacies. Consult with your local OKFB Insurance Agent to help you create a farm transition plan.