Succession planning is one of the most crucial and challenging aspects of managing a family farm. It’s not just about passing down land and equipment—it’s about ensuring the farm’s future success and preserving your family’s legacy for generations to come. Jim Marzolf, Executive Vice President of Pipestone Business, shares key insights on navigating the challenges of farm transitions and offers important considerations for approaching this vital process.
- Start Early and Communicate Openly
Effective succession planning requires careful, early preparation. Begin the process long before retirement is on the horizon. The more time you allow for planning, the smoother the transition will be. Central to this process is open, ongoing communication with all family members involved. It’s essential to gather the family to discuss individual goals, expectations, and concerns about the farm’s future. Transparent communication will help prevent misunderstandings and align everyone on the same vision. - Involve the Whole Family
Succession planning goes beyond transferring ownership—it’s about aligning the family’s vision for the future of the farm. Every family member, whether full-time or part-time, plays a role and has a stake in its legacy. It’s important to consider their perspectives and ensure that the plan supports the next generation’s growth and success.
“Succession planning is not just about passing down land or equipment; it’s about ensuring the next generation has the support, structure, and skills to thrive,” Jim notes.
One of the main challenges families face is finding fairness in dividing assets. While equality is often the goal, Jim explains that it’s not always possible: “You can’t always divide the assets in exactly the same way.” Instead, families should focus on fairness, which may mean distributing assets based on each person’s involvement and contribution to the farm. - Build a Trusted Advisory Team
Farm succession planning is complex, involving legal, financial, and emotional factors. To navigate these challenges, it’s crucial to assemble a trusted team of advisors, including an attorney, accountant, and financial planner with agricultural expertise. These professionals will help ensure your plan is legally sound and financially viable, addressing issues such as estate taxes, business structures, and asset protection.
Jim emphasizes the importance of a facilitator to guide the process. “Having a facilitator, whether it’s an attorney, CPA, or business consultant, can help keep the process on track,” he explains. A neutral party can mediate difficult discussions and keep everyone focused on the long-term goals. Without this guidance, Jim warns, “the process can stall,” potentially delaying the transition. - Consider More Than Ownership
While identifying the next owner of the farm is critical, succession planning goes beyond just ownership. Consider who will assume leadership roles, make day-to-day decisions, and be responsible for the farm’s management. Equally important is training the next generation to take on these responsibilities. Mentorship can play a key role in preparing successors for the demands of farm leadership and ensuring they have the skills and knowledge needed to succeed. - Address Common Challenges
Succession planning can be hindered by challenges from both generations. Jim highlights the risks of delayed transitions, especially for older generations who may struggle with retiring. While farming allows them to remain involved, postponing the transition can complicate the process. He advises starting the transition early, before age becomes a factor in decision-making.
For the younger generation, readiness can be gauged by whether they’re entrusted with significant responsibilities and prepared to take on leadership roles. “The transition can stall when there’s a lack of confidence in the next generation’s ability to manage the operation,” Jim explains. - Foster Unity and Collaboration
Jim believes that successful succession plans should foster unity within the family. While it is common for the farm to be divided into pieces—such as one child taking on specific barns or parcels of land—he advocates for minimizing divisions between “yours” and “mine.” A more collaborative approach, where everyone works toward a shared goal, strengthens the farm’s long-term viability and preserves the family’s legacy.
A Personalized Approach
Ultimately, no two farm succession plans are the same. Jim concludes by emphasizing that while each family’s situation is unique, a thoughtful, well-planned approach is essential for a successful transition. By starting early, fostering clear communication, and collaborating with trusted advisors, farm families can navigate the complex succession process and secure the future of their operations for generations to come.
Article by Jim Marzolf
Jim Marzolf is a Minnesota native who graduated from the University of Wisconsin with a B.S. in Animal Science; followed by an Executive MBA from Purdue University. Jim brought his experience in livestock production, finance, and business management to PIPESTONE in 2019 and serves as Executive Vice President of Pipestone Business.