Planting before the rain hits, repairing a broken irrigation system, chasing down a wayward calf, troubleshooting a combine at the peak of harvest—there’s always another urgent task vying for your attention. It’s easy for something like succession planning to get pushed to the back burner. But here’s the truth: without a clear plan for the future, all the sweat, dedication, and resilience you’ve poured into your farm operation might not build the legacy you’ve worked so hard to create.
Why Succession Planning Matters in Agriculture
Succession planning is the process of transitioning ownership, management, and operations of a farm to the next generation—whether that’s your kids, grandkids, nieces, nephews, or even a trusted employee who feels like family. Though it’s not always an easy topic of discussion, without next steps in place, challenges can arise, leaving your family to face tough conflicts and heavy decisions about leadership roles, inheritance disputes, asset values, and unforeseen expenses. “The biggest challenge is disharmony within the family,” says Cornerstone Bank’s Kyle Nelsen. “From a generation perspective, never talking about money causes a lot of angst. It’s so important to have those conversations to provide that harmony.” Without a plan in place, families risk missed opportunities and added stress, making open discussions and strategic planning essential for a smooth transition.
In agriculture, the stakes are especially high. Your farm is more than a business—it’s a lifeline for your community that sustains local businesses and community connections. Without a proper succession plan, the ripple effects can be profound. Imagine the local grain elevator where you’ve hauled your wheat for years is suddenly unable to fill contracts because your operation is tied up in legal limbo. Or consider the farmhand and friend who has worked your fields for decades and relies on your operation for their livelihood—now facing uncertainty or job loss amid tumultuous ownership transitions. A solid succession plan ensures your operation continues to thrive for generations to come.
Create a Well-Thought-Out Succession Plan
Alright, let’s get down to business! Start putting a solid plan in place by focusing on these key elements:
- Identify successors. Choose who will take over the farm—whether it’s a family member or a trusted employee. Make sure they have the skills and interest needed to carry on your farm’s legacy and values.
- Develop financial plans. Understand the financial needs of your farm. Work with a trusted and knowledgeable banker who knows and understands the nuances of ag operations to ensure the debts, taxes, real estate, and other assets are properly structured, and successors are prepared to handle impending responsibilities.
- Establish roles and responsibilities. Clearly outline what each person involved will be responsible for, whether they are working on the farm or managing business decisions.
- Communicate with everyone involved. Open, honest conversations with family members and potential successors can prevent misunderstandings down the road. Discuss your vision and get input from others to ensure everyone is on the same page.
- Explore legal considerations. Set up the proper legal documents, like wills and trusts, to ensure transitions are clearly and fairly outlined. It’s essential to consult with an attorney and tax advisor.
- Plan for the unexpected. It’s important to have a backup plan in case of unforeseen events, such as illness or other emergencies. This ensures farming and ag operations can continue running without disruption.
By taking these steps, you’re setting your farm up for long-term success and preserving everything you’ve worked hard to build.
Benefits of Effective Succession Planning
When done right, a succession plan brings lasting stability to not only your family, but your community. An effective succession plan secures your family’s future by ensuring the farm remains in good hands for generations to come. Clear roles and expectations prevent potential conflicts and keep family relationships intact.
A solid plan also ensures business continuity, allowing the farm to keep running smoothly and providing job security for those who rely on it. Financially, proper planning can reduce tax burdens and provide a more seamless transfer of assets, giving you peace of mind into retirement and positioning beneficiaries for long-term success.
More broadly, a well-crafted succession plan supports the continued growth of your community, maintaining the values of family-run businesses that local economies depend on.
At Cornerstone Bank, we understand that every farm and agricultural operation is unique, and every succession plan deserves personalized expertise and care. With locations across North Dakota and South Dakota, we take pride in serving the families, operations, and multi-generational farms that are the backbone of our agricultural community.
Succession Planning Brings Peace of Mind
From financial planning and asset management to estate planning and retirement strategies, we offer a full suite of wealth management options to help you navigate every stage of your journey. Whether you’re planning ahead, transitioning ownership, or enjoying your retirement years, Cornerstone Bank can help.
“Early in my career, I had the opportunity to work with a farmer facing significant health challenges,” says Kyle, who has spent over 25 years helping farmers and ranchers across North Dakota develop and implement succession plans. “The farmer had a large family and wanted to ensure his children were treated fairly,” he explains. Kyle guided him through the steps to create a succession plan. “He was incredibly thankful for the peace of mind the planning brought him,” Kyle adds, noting that he’s kept in touch with the family over the years. “His son is now operating the farm and doing an incredible job.” For Kyle and the team at Cornerstone, the relationship piece is especially important. “The real value is getting out there and experiencing life with the people I’m helping,” adds Kyle. A hands-on approach allows him to truly understand the challenges families face and craft solutions tailored to their unique needs. When it comes to succession planning, Kyle stresses the importance of being proactive. “Start early, make planning a priority, be inclusive, and be realistic.” By following these guiding principles, families can navigate the complexities of succession with clarity and confidence, ensuring their legacy for generations to come.
How To Get Started
The first step is simply to begin the conversation—whether it’s with your family, trusted employees, or professional advisors. Start by identifying your potential successors and make sure they’re on board with your vision. Then, work with financial advisors and an estate planner to assess your farm’s financial situation, helping to create a roadmap for taxes, debts, and asset distribution. Don’t forget to involve a legal expert to ensure your documents are in order.
By laying the groundwork with the right people, you’ll set your farm up for a smooth transition, ensuring a legacy that thrives for generations to come. Start the conversation with a trusted financial advisor today.
Market President
Kyle Nelsen
Direct: 701-776-2451