Succession planning is easy to avoid. However, it is the most important topic to address for the future of our farms and to protect future family relationships.
The best way to do this is by identifying the biggest challenges farm families face in planning and finding solutions to those issues. Below are five reasons people avoid planning, along with solutions that every family can implement.
1. Tax and regulatory uncertainty. One of the most common reasons I hear for not planning is that potential federal estate or income tax changes complicate and overwhelm planning. Many also fear regulatory uncertainty that might make farming more difficult in the future.
It is hard to plan when the outcome is unclear. In an era of high farmland values, this uncertainty can cause anxiety.
One recent positive change from a tax-planning perspective for farm families is the passage of some of the “permanent” tax provisions in the One Big Beautiful Bill Act (OBBBA). In 2026, the estate and gift tax exemption will be set at $15 million per person and adjusted annually for inflation. This is the first time in a long time that there has not been a sunset of that tax law looming. Removing that roadblock is positive.
Of course, future Congresses and presidential administrations could enact new laws. Many factors aside from taxes and regulatory considerations that are important to farm families also exist.
Therefore, don’t wait to plan. Do not let a short-term tax decision interfere with a long-term plan that includes on-farm and off-farm heirs, retirement planning, and farm program planning. Develop a plan that is easy to modify and flexible enough to weather political instability. And revisit this plan at least every five years.
2. Generational differences. Often, the planning process involves multiple generations. This might include the senior generation passing the farm to the middle generation, and perhaps a younger generation. Since each generation communicates differently, bridging that gap is essential.
A lack of planning by the senior generation may lead to a more difficult planning process for the middle and younger generations. Most likely, the middle generation has identified its own potential successor. Understanding each generation’s visions, goals and values is critical when developing a plan that will leave a lasting legacy. Research and experience show that farm families who do not communicate are less likely to achieve a successful transition.
The solution is to identify what is common to all generations. Regardless of generational differences, each generation wants open communication. They just might not communicate it in the same way.
Involve everyone during planning so questions can be asked and issues can be addressed. The goal should be that everyone knows what the plan is and sees their place at the end of the planning process.
3. Not knowing how to retire. You may be saying, “Wait a minute — retire? I’m not ready to stop being involved in our operation.”
Many senior farmers fail to plan because it is difficult to understand what cash will be needed for their retirement years. The good news is “retirement” is a process that differs for every single farm family. Whether you “slow down,” “take a step back” or give the next generation responsibility for the farm while helping out, building a customized retirement plan is a key component of your overall succession plan.
Some families may assume that they will be able to live comfortably in later years on a combination of Social Security and cash rental income. However, don’t put all your eggs in one basket. The national economy has its ups and downs, and there are no guarantees.
Start planning as early as possible. Talk with your insurance agent, financial adviser and tax professional annually to discuss options. There are many attractive tax advantages linked to saving for retirement, including deferring tax on income. This is something that farm families will want to access, especially in high-income years.
There also are many retirement saving vehicles, such as Roth or traditional IRAs, Simplified Employee Pension IRAs, 401(k)s, or defined benefit plans. Don’t forget the advantages of contributing to an annuity or insurance policy.
You might feel overwhelmed by the options. My advice is to educate yourself, rely on your team of experts and develop a flexible financial plan.
4. Long-term care fears. One reason I hear that often delays planning is fear over long-term care costs and the potential length of a long-term care stay of a loved one.
The best-case scenario is to save for these costs and invest in some form of long-term care insurance or insurance rider attached to an insurance policy. Traditional long-term care insurance policies are more difficult to find and more expensive than ever.
Many companies sell alternatives to long-term care insurance, such as death benefit or chronic illness riders, that can provide some liquidity during life under certain circumstances. While investigating these options, it is important to read and understand the policy you are obtaining. Ask your agent or adviser if you have questions.
5. Avoiding confrontation. Avoiding a family feud or uncomfortable conversations may be the biggest reason why farm families fail to plan or communicate the plan. There is plenty of evidence through court cases, litigation and stories from farm families that shows failure to conduct hard conversations early in the planning process results in far more uncomfortable and even catastrophic consequences for farm families.
The good news is that many families are now more willing than ever to have conversations as a family that they may not have had in the past. If your family is unable to have these conversations, there are ways to facilitate communication through mediation, counseling or other types of professional intermediary involvement.
Here’s a challenge
Now that we’ve identified the top five reasons why we don’t plan, your challenge is this: Tackle one new thing this summer.
It may be meeting with your financial adviser to walk through your cash flow or financial plan for retirement. Or, it may be having that initial family meeting you have been delaying. Whatever it is, taking that first step will put your family on the path to successful succession planning.