Getting Started / Tillable Plus
1. Claim your farm.
After years of low market prices, regulatory quagmires, and increasing aches and pains, many senior farmers, have “had all the fun they can stand.” And thoughts of retirement may equate to those visions of “sugar plums dancing in their head.” While they can look back on 40, 50, or more harvests with pride, handing over the keys to the next generation is akin to when their Dad handed over the reins to them.
Yesterday’s horses are measured in today’s horsepower and while tractor and combine cabs are comfy, they don’t match the comfort of the living room couch with their bride who has probably been urging them on to make a retirement decision for many years. And the answer is easy, you just don’t know where to start with a transition.
What do I do with the land? What about all my machinery? What am I going to do with my spare time? And how do we treat the kids fairly, by dividing up the ownership.
First things first; let’s address the land issue, and maybe the last issue falls nicely into place.
Popularity is growing with farms in transition being part of a Limited Liability Corporation, commonly known as an LLC. It is the easiest method to transfer ownership and provides the most liability protection. Essentially, shares of the LLC and the land ownership are divided among the family members.
The retiring couple gets shares, children get shares, and any other desired beneficiary gets shares. Its almost like Oprah giving out goodies to her audience members. And after one’s passing, his or her shares are distributed to the family survivors.
The LLC is registered with the appropriate governmental agencies, with the help of an attorney who is an important part of the process.
Another tool to distribute the assets of a farming operation is a trust, and the one creating the trust can specify in any desired detail what is to happen to the assets, such as whether they can be sold, for example. A trustee is appointed who serves as a referee of sorts if there are any issues that arise that were not addressed when the trust was created.
Trust laws vary from state to state, so legal counsel or a certified trustee are important parts of creating a trust.
If there is no particular desire to maintain ownership of the farmland, a sale of the property is an alternative, which opens several doors. Neighbors can be privately approached to determine their interest in owning it at an agreed price. It can also be publicly listed with a licensed realtor who would charge a commission for the transaction.
The farm could also be sold by auction, either at a public event, or by sealed bids. Auctions can frequently result in the highest price, or if sold with a reserve, it could result in no sale, if bids were less than the reserve.
Sales of such a large asset as land will result in substantial tax liability, which can be deferred, if the farmland is retained and rented to another farmer. That not only allows a retiring farmer to maintain an income stream, but transfers the tax liability to an heir.
Maintaining ownership and retaining an income stream can be managed with the help of Tillable, which will arrange a “hassle-free” crop share or cash rent lease and select an operator who would provide the best fit for the farm. That preserves good relations with long time neighbors.
And if a retiring farmer wanted to maintain more control over what happens on his or her farm, Tillable can implement a custom farming arrangement that keeps the owners involved, without day to day issues that take time and effort.
Tillable puts the easy chair into retirement.