Farm and ranch families who are not familiar with the term “succession planning” should take the time to learn as much as they can about it.
Succession planning is the term lawyers use when they talk about helping one generation of a family pass the farm on to the next generation.
As such, it’s about keeping families together as much as keeping farms together.
Nearly everyone has heard the horror stories about families who did not plan for the next generation. They’ve heard about a tax burden that forced the next generation to sell some or all of the farm. They’ve heard about one member of the family getting the farm and siblings getting little or nothing. They’ve heard about some members of the family being forced to take out a huge loan to pay siblings for their share of the farm.
The stories go on and on. Without thoughtful succession planning, mom and dad could inadvertently drive a wedge between their children and not even realize it.
Another result of little or no succession planning is the farm being sold for housing or other developments.
The worst case scenario is the lack of succession planning creating hard feelings between family members and the farm being split up.
There’s nothing easy about succession planning, but not doing it is even harder. An estimated 80 percent of Oregon’s farm families do not have a succession plan.
One of several tools that can be used in succession planning is setting up a conservation easement for the farm or ranch, allowing the farm’s development rights to be sold to a third party.
This does several things. It guarantees that the land will stay in agriculture forever, and it frees up money to help the older generation of a family retire. It also reduces the overall value of the land, which will reduce potential tax burdens.
Other devices such as temporary covenants and management plans can also be used.
We’re not lawyers or accountants, but we do know that such easements and succession planning can help families as they sort out the many issues that face them. Many sources of help are available for families, including lawyers and even Uncle Sam.
The federal government has $450 million in its Agricultural Conservation Easement Program through the Natural Resources Conservation Service. The money is set aside to help protect farms and ranches by paying owners to limit non-agricultural uses. The program will pay up to 50 percent of the value of development rights, providing that matching funds are available.
In Oregon, however, matching funds have not generally been available. The state Legislature during the upcoming session will have the opportunity to address that shortcoming. The legislature established the Oregon Agricultural Heritage Program in 2017 to help farmers and ranchers plan the futures of their farms and keep the land in agriculture.
During the past two years, a commission has set up the program to help farmers set up easements, covenants, management plans and do succession planning.
Now the program needs money to match the federal contributions to the easements. By using federal money to leverage the requested $10 million in state funding, the program can potentially double its effectiveness.
We aren’t in the habit of telling the legislature how to spend taxpayer money, but the importance of maintaining the agricultural land base in Oregon cannot be overstated. Considering that an estimated 64 percent of farms and ranches in Oregon will pass from one generation to the next in the next 20 years, protecting agricultural land as a resource is money well-spent.
It is in a real sense a succession plan for Oregon’s farms and ranches.