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Farm Succession Planning

Owning farmland is a unique experience whether you inherited the farm property or purchased it as an investment. The asset combines cash and appreciation returns along with desirable physical attributes. Investments in farmland compare favorably with returns from other investments, while at the same time many farm properties carry a family legacy passed on through the generations who have owned the land.  

  

If you have questions concerning anything about your farm, please read further in this section of the Farmers National Company's Landowner Home Page to learn more about the following: 

  

        Whether your rental arrangements are fair to you and your tenant. 

        How you can ensure that your heirs will receive full benefit from the farmland they will inherit someday. 

        How you can help the next generation farmland owner learn more about the farm and agriculture.  

        How children can assist elderly parents in taking care of their farm property. 

        Who to turn to for advise after inheriting a farm. 

        How to know what is happening on your farm. 

  

Share this information with your parents, children or friends who own farmland. 

  

Topics: 

 

        Proactive Planning for the Future of Your Farm or Ranch  

        Frequently Asked Questions  

        Building Farmland Wealth  

        Finding Your Farm Management Professional  

        Farm Analysis and Consultations  

        What Others Are Saying  

        Links  

  

Proactive Planning for the Future of Your Farm or Ranch 

  

Know what you have and plan for the future 

1.      Know your landownership goals 

2.      Seek competent professional help 

3.      Review your property ownership 

4.      Discuss your future plans 

  

Put your plans in writing 

1.      Update your will or trust  

2.      Complete new deeds (if ownership changes) 

3.      Record the deeds 

4.      Make a list of farm contacts and tell your children where it is 

        FSA Office 

        NRCS Office 

        Insurance Agent 

        Grain Elevators 

        Input Suppliers   

        Farm Manager 

  

Educate the next Generation 

1.      Communicate your goals and wishes 

2.      Make trips to the farm with them 

3.      Encourage awareness 

4.      Share your farm story 

  

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Frequently Asked Questions 

  

How do I determine a fair rent or lease for my farm? 

In taking care of your farm, there are times that you need additional expertise in specific areas. You might need analysis of your current leasing arrangement to see if it is fair and profitable for you as the landowner and fair for your farm operator. You may need to obtain a better idea of the value of your farm as you work with estate planning. Special projects on your farm such as conservation work or Conservation Reserve Program compliance may need additional oversight.  

  

Whatever your need, you can always turn to one of Farmers National Company's Professional Farm Managers to provide expert analysis and consultations.  

  

Find a Professional Farm Manager near your farm  

  

I have questions about legal and tax issues concerning farm ownership. 

At Farmers National Company, we always advise that you seek out the best legal council and tax expert that you can find to help structure ownership of your farm asset. Good advice pays big dividends.  

  

My parents need assistance taking care of their farm. How can I help? 

It is a common situation for aging parents to look to their children for help in managing their financial affairs. If a farm is included in their assets, the increasing complexity of leasing, grain marketing, and government farm programs can often overwhelm people so that they turn to professional advice. 

  

In today's agriculture, it takes experience and knowledge to profitably manage farms. Many landowners call on experts in farm management to make the farm profitable and enjoyable to own.  

  

Find a Professional Farm Manager near your farm  

  

I just inherited a farm. Now what? 

The death of a parent or relative is an emotional time for everyone. On top of that you add the stress of legal and financial matters that need to be attended to. Then if you inherit a farm, you may be adding additional responsibility without current knowledge of farm ownership issues. Questions may arise concerning appropriate leasing terms, farm profitability, grain pricing and farm value. It becomes a load of unfamiliar things to take care of, especially if the family members live many miles away. 

  

If the parent or relative had arranged for professional farm management services before their death, the transition of farm management is carefully taken care of. If this was not done previously, please contact Matt Gunderson, Assistant Vice President of Client Relations, at 1-800-346-2650 or email him at MGunderson@FarmersNational.com to discuss ownership transition and management needs.  

  

My tenant doesn't tell me anything. How can I know what is going on with my farm? 

Good communication is the key to understanding what is happening on the farm and to ensure that it is well taken care of. Unfortunately, this doesn't always happen between the farm operator and non-operating landowner.  

  

Farmers National Company personnel work to understand the goals and expectations of our clients and to communicate information throughout the year with written reports and personal conversations. Read more about the Farmers National farm management system at Farm Management System. 

  

Is farmland a good investment? 

Many people include farmland as a portion of their real estate holdings and overall investment portfolio. They like the normally steady annual cash returns of farmland coupled with the long-term appreciation in value. For example, one farm under management by Farmers National Company had an average annual Return on Investment (ROI) of 11.28% during 1991-2005. The ROI represents both cash and appreciation returns. Please see the Building Farmland Wealth section under this area of the Landowners Home Page. 

  

I want to sell my farm. How do I get top dollar for it? 

Today's market for agricultural land is strong. Determining the appropriate selling price takes a farm real estate professional working on your behalf who knows the marketplace for land, can aggressively market the property, and can get the best possible price from the sale. To learn more please see Real Estate Services. 

  

I want to keep the family farm, but my siblings want to sell. Is there a way I can keep it together? 

Family members have different investment strategies that don't always work with the goals of other relatives in the joint ownership of a family farm. Some may want to keep the farm as a sound investment and others may want to sell and collect the cash.  

  

Bringing in a professional from Farmers National Company to work with the differing goals of the various owners may bring about a resolution that works for everyone. To discuss your situation, please contact Matt Gunderson, Assistant Vice President of Client Relations, at 1-800-346-2650 or email him at MGunderson@FarmersNational.com. 

  

How can I find out what my farm is worth? 

There are times that you may need an expert opinion of what your farm is worth in today's market. This might be for estate valuation purposes, division of the asset, or gifting. Whatever your need, Farmers National Company has Certified Appraisers who can provide top quality appraisals. Please see Farm and Ranchland Appraisals. 

  

I want to pass our family farm to my children. What is the best way to do that? 

You've worked hard to build an investment portfolio that also includes farmland. Now it is time to make plans for passing the benefit of land ownership to the next generation. The question becomes how best to set up a seamless, low-cost transfer that you know will maintain the value and profitability of the asset. 

  

Many times farmland owners turn to Professional Farm Management or one time Consultations to help them setup appropriate transfers of their farm. Please contact Matt Gunderson, Assistant Vice President of Client Relations, at 1-800-346-2650 or email him at MGunderson@FarmersNational.com for more information.  

  

I live 1,000 miles from my farm. Who can I trust to take care of it? 

It is difficult to take care of the day-to-day responsibilities of a farm when you live a great distance from it. Farm operators are working with more and more acres as they grow their business and may not be able to give full attention to the details of each farm.  

  

Farmers National has local Farm Managers who know agriculture and the people in their area. Our Managers act as the landowner's agent to represent the best interests of the client. Good communication and accounting for all funds helps make farmland ownership nearly worry free. 

  

Find a Professional Farm Manager near your farm  

  

How can I find a farm professional near my farm? 

Whether you need full management services for your farm, want to sell the farm, or need a one-time consultation, Farmers National Company has a professional near your farm. Our Farm Managers have knowledge and experience in local agriculture that they utilize in serving the needs of their clients. Please refer to Find a Farm Manager to locate a Farm Management expert that can help with your farm. To handle your farm sale or purchase needs, Farmers National Company has a professional real estate agent near your property. Find a Real Estate Agent near you. 

  

I don't understand all the insurances for my farm. Who can help me sort it out? 

Many farmland owners have crop, hail, property, and liability insurance for their farms. Trying to sort out the different coverages and costs can be daunting. At Farmers National Company, we work to provide cost-effective insurance coverage for our clients to mitigate risk and improve profitability. To learn more, please see Insurance Services.  

  

I hear about hunters paying money to hunt on farms. Can I get that for my farm? 

Leasing farmland to hunt on is a growing business. Many people are looking for places to hunt a variety of wildlife. Landowners are discovering that they can earn extra money from leasing their land for hunting. But, the landowner has to be sure that they have good liability insurance in place before leasing the property. Also, there are challenges when setting the lease fee and monitoring how the property is used. 

  

If you want to learn more about earning additional money from your farm by having a hunting lease, go to our website www.NationalHuntingLeases.com or contact Troy Langan at 1-800-346-2650. 

  

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Building Farmland Wealth 

Building wealth through ownership of farmland is normally a long-term investment, the same as owning other real estate or investing in the stock market. Total returns for owning farmland are a combination of annual cash profits and appreciation in value. Farmland is normally expected to have a 3%-5% cash return on investment annually. Appreciations in value over the long term will vary from region to region. For example, the following table shows the average annual appreciation in value for Illinois farmland for the period 1921-2006. 

  

Average Yearly Changes in Farmland 

Values for Different Time Periods 

Years Between 

Average % Increase 

1921 - 1930 

-5.4 

1931 - 1940 

-1.3 

1941 - 1950 

7.8 

1951 - 1960 

6.2 

1961 - 1970 

4.6 

1971 - 1980 

15.9 

1981 - 1990 

-3.1 

1991 - 2000 

4.8 

2001 - 2010 

8.3 

2011 - 2014 

12.4 

-- 

-- 

2005 - 2014 

11.6 

1995 - 2014 

8.0 

1985 - 2014 

5.2 

1975 - 2014 

6.3 

1965 - 2014 

6.8 

Source: University of Illinois 

  

When you combine the cash and appreciation in value for total returns, farmland has delivered a 10.47% return during the period 1992-2005 according to the following sources NCREIF, Bureau of Labor Statistics and the Federal Reserve System. 

  

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Finding Your Farm Management Professional 

In order to properly manage a farm, the owner needs to know the local rental arrangements, local farmers, weather conditions, costs and many other details. If you live at a distance from your farm, this can be difficult to do. That is why Farmers National Company has local Professional Farm Managers throughout 23 states. These Managers know the local conditions near your farm and can provide the expertise to handle any situation. To find the Farmers National Professional Farm Manager nearest your farm, please call 1-800-346-2650 or search for a Professional Farm Manager. 

  

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Farm Analysis and Consultations 

In taking care of your farm, there are times that you need additional expertise in specific areas. You might need analysis of your current leasing arrangement to see if it is fair and profitable for you as the landowner and fair for your farm operator. You may need to obtain a better idea of the value of your farm as you work with estate planning. Special projects on your farm such as conservation work or Conservation Reserve Program compliance may need additional oversight.  

  

Whatever your need, you can always turn to one of Farmers National Company's professionals to provide expert analysis and consultations. For more information on consulting services, contact Matt Gunderson, Assistant Vice President of Client Relations, at 1-800-346-2650 or email him at MGunderson@FarmersNational.com.  

  

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What Others Are Saying 

Client Comments  

  

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Links  

Links to Other Ag Sites  

  

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