How to Create a Farm Transition Plan July 2, 2021 It’s important to have a farm transition plan in place. To prepare for the unexpected, and as you consider hanging up the boots and retiring. If you’re getting ready to retire or looking to, consider these steps when getting started 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 that have life insurance wish they had purchased it earlier in life. Life insurance can help your family in the event of the unexpected. It leaves them more equipped to take care of themselves without you providing for them. Step 2: Define Specific Goals for Your Transition Plan Start discussions on how to transition assets and property over to the next generation. Remember, it’s critical to take some time to evaluate all assets and sources of income and to establish goals. To help, think 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 keep 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, you can 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 and become the owner. Choosing the right person to take over the farm or ranch, finances and additional assets is a momentous task, but a critical one. There are many approaches that farmers and ranchers take when deciding who their successor will be and how to divide up assets. With multiple heirs, one approach is to split everything evenly between them. Another approach is determining what is fair and best for your farm or ranch. 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 have been established, along with who is taking over the finances, responsibilities and the assets, it’s time to start thinking strategically about how to transition these assets. There are many ways, but the two most common are giving the assets as gifts or transferring them through a will. With either approach, think about consulting with legal, tax and insurance professionals. Whether transferring assets through a will, by gifting, or through some other means, it’s important to understand the potential benefits and drawbacks of each 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.