Wondering just how to transfer the family farm to the next generation? Explore these options.


Many farms and ranches are owned by a family unit—97 percent of them in the U.S., according to the USDA’s latest Agriculture Census—and many people want to keep the family farm in the family. Recently we shared some tips on the process, such as getting the conversation about transitioning the family farm to the next generations going and what everyone’s concerns might be. Once you’ve got the ball rolling, what next, financially? The an article in Citrus Industry Magazine have shared some options for the financial details on transitioning the family farm to your children or grandchildren.

Financial Options for Transitioning the Family Farm

Once you’ve gotten past the initial planning phase, it’s time to consider what method you’ll use to transfer the family farm the family members who are interested in taking it on. According to experts quoted in the article, there are two common options.

  1. Buy-Sell Arrangements. “Buy-sell arrangements are plans put in place in advance of death, retirement or disability that give an orderly transition to that farm to the next generation or to the next shareholder,” explained Michael Loney, regional director for John Hancock Life Loney Insurance in several midwestern states, in the article. “It involves working with your accountant, your attorney and your insurance advisor to come up with the proper type of buy-sell arrangement and instituting that plan and putting it in place so all the family members — all the key players — know what’s expected and when it’s going to happen and how it’s going to happen.”
  1. Cash-Balance Plans. “We’ve seen a number of farmers use cash-balance plans as a way of transferring ownership from one generation to the next generation,” said Blake Willis, chief consulting officer with July Business Services, based in Texas, in the article. “They can do that by making tax-deductible payments to the older generation that is going to leave the business. And the reason a cash-balance plan works well for this is because you have such significantly larger contributions that can be made each year — depending on the owner’s age — potentially $200,000 or more a year.” An example is given of the nest generation paying $2 million for an ag operation by paying $200,000 a year for 10 years. “And instead of the older generation receiving that $2 million and paying tax on it, that $2 million is going tax deductible into a cash-balance plan,” Willis explained.

Whichever way you plan to go in transferring the family farm, professional help is advised. Griffin Fertilizer is committed to helping both growers and ranchers make sound agronomic and economic decisions in order to maximize the health of their grove and pasture. As a full-service custom dry & liquid fertilizer blender and crop protection product distributor, we will continue our mission to further advance Florida agriculture. For questions or concerns about your farm or pasture, contact us and one of our team will be in touch.

Image courtesy of Max Wahrhaftig.