Farm Transition

Who will get the farm? A guide to small-farm planning for the next generation.
Farm Transition - Articles


When a farm is ready to change ownership, the current and future owners will need to assess the financial position and legal structure of the farm. Everyone involved in the farm transition will need to clearly communicate what role they want in the future of the farm, if any. The farm transition can be a challenging and emotional time. A financial planner and an attorney should be consulted through this process, and an Extension Educator can help facilitate family communications, financial decision making, and technical training of new farm managers.

In Pennsylvania, the Center for Farm Transitions sponsored by the Pennsylvania Department of Agriculture has programs that are designed to help you keep your land in agriculture. The Clean and Green program can lower your farm property tax by assessing your land values based on use rather than market value.

Selling farm land could facilitate farm transition. The Conservation Easement program can protect farmland from development for 50 to 99 years by selling the development rights to the State. Farmland that is over 250 acres may be eligible to become an Agricultural Security Area, which will protect farms from local ordinances that would interfere with agricultural activities.

PA Farm Link is a non-profit organization that connects new farmers with existing farmers to foster farm transition in Pennsylvania. They have a database with listings of farms for sale and farm apprenticeships in Pennsylvania. PA Farm Link also offers workshops on Farm Transition in different locations around the state.

The United States Department of Agriculture provides many resources for farm transitioning such as guaranteed loans and land contract guarantees. The loans can be used for the purchase of new equipment or the purchase of farmland. The land contract guarantee facilitates the transition of land to a new owner by financially backing the purchaser and the seller for 10 years. For more information or to enroll in these programs, contact your local Farm Service office.

University of Vermont has a series of videos and materials covering farm transition that are available for viewing online. These short videos teach the basics of estate planning, retirement planning, conservation easements, and how different business structures are used in farm transition. You can also watch and listen to other farmers share their personal experiences with farm transition.

Planning for retirement includes calculating the cost of long-term care, the care you will need as you age. A financial advisor can help you calculate this cost based on your geographic region and your finances including insurance and invested money that you may have. You are responsible for the cost of your long term care with a few exceptions. Medicare will cover the cost for skilled services or rehabilitative care for those who are disabled or chronically ill. Medicaid will help cover the cost of long-term care if you are an eligible low income resident. The United State Department of Health and Human Services' website on long term care provides more details on the topic of long-term care.

University of Minnesota Extension has several fact sheets on farm transition and estate planning that will help you to think through your transition plan. These free, easy-to-understand educational materials cover tax considerations, business structures, gifting farm assets, how to value someone's labor on the farm, and things you need to know before meeting with an attorney who will help you transition your estate. If you feel you can create your own transition plan or set the groundwork for the plan the Ag Transitions web site created by the Center for Farm Financial Management at the University of Minnesota is an excellent place to begin the process. This is a free tool where you can create, edit, and save parts of your transition plan and have a reviewer such as an Extension Educator or trusted professional give you feedback. You can create a plan on-line at your own time and pace.

If you choose to undertake the transition process as a family, a place to begin is with a web site titled Who Will Get Grandpa's Farm. You will work through specific exercises and there videos to watch to assist with the process.

For a quick checklist to begin the transition process, Dr. David Kohl has a publication titled Ten Rules of Transition Management which is a good place to begin the process. Another good set of publications to view is from the University of Maryland's Farm Transition and Estate Planning web site. You can view webinars and learn the basics prior to contacting your estate planner.

Penn State Extension offers programs that facilitate farm transition planning. Extension's inter-generational programming is designed to address vital social and community issues, including farm transition. If you would like to request a farm transition workshop or help facilitating discussion around sensitive issues that involve multiple generations, contact Matthew Kaplan with the inter-generational initiative or John Berry with the farm business management team.

Just remember it is never too soon to begin the transition process. If you choose to develop your plan without professional help, you should still have an estate planner or attorney review the final document. You may have overlooked something or created a structure or plan that will not be beneficial in the long term. Estate laws change and each State may be different so, having an estate planner or attorney create the plan is a good idea.