Serving Southern Jefferson County in the Great State of Montana

Extension Office: Transferring Your Farm or Ranch to the Next Generation

Talk with almost any Montana family farm and ranch enterprise and you will find one of goal is to transfer land and businesses to the next generation.

“The process can be challenging to all members of the family,” says Marsha Goetting, MSU Extension family economics specialist. “Some families may avoid the process completely because of the economic, legal, and family decision complexities. Others may start the process but abandon it to avoid conflicts that can arise from differences in goals, values, and feelings of fairness among family members.”

“The MSU Extension publication “Transferring Your Farm/Ranch to the Next Generation” has worksheets and information for each generation of a family to help focus their thoughts and feelings about succession planning issues,” says Kaleena Miller, Madison-Jefferson County Extension Agent.

“Because of the strong bonds inherent with the heritage and lifestyles, generation transfers are more frequent in agriculture than any other business,” Goetting said. “Unresolved conflicts can have major impacts on the long-term success and viability of the operation as well as the transfer plan itself.”

Goetting said the first question families should address in this process is whether the business is profitable enough to transfer to the next generation. Because emotions can get involved, families may need to consult with an accountant or farm management consultant to help in this evaluation.

“During my estate planning meetings across Montana before COVID-19, members of the younger generations found it difficult to initiate a discussion about the farm and ranch transfer and succession processes,” Goetting said.

“They feared older generations may perceive them as being overly interested in their inheritances. On the other hand, when members of the older generation bring up the topic, the younger generation may not be responsive. They do not want to think about their grandparents or parents dying.”

“Families who have been through the transfer and succession planning process suggest starting at an individual level,” Miller said. Then, families should discuss issues in a larger group. For example, if a father feels it important for the farm or ranch to remain in the family’s possession but his wife is ambivalent, they need to come to an agreement before they begin succession planning with their children. Afterward, the two generations can have a family meeting to share thoughts on the process.

“Reaching a family agreement about goals before a business discussion helps negotiations run smoothly,” Goetting added. While there still may be times of tension or conflict about values and roles in the family business, communication is key in keeping the process moving.

“Preparing farm and ranch family business members for transfer and succession planning is a part of the older generation’s responsibility to the younger generation,” Miller said. “The legal and economic aspects of the transfer plan are important. Connectedness among the family business members and the working out of future management strategies, or succession planning, is also absolutely critical to the success of any transfer plan.”

“Transferring Your Farm/Ranch to the Next Generation” can be found at http://msuextension.org/publications/FamilyFinancialManagement/EB0149.pdf. For those without computer access, copies are available from the Madison-Jefferson County Extension office at 287-3282.

 

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