Mississippi’s predominantly owner-operated farms face unique challenges in farm continuation planning. The state’s farmers, as reported by the Mississippi State University Extension Service, are aging, with the average farm owner being 60. Creating a family farm continuation plan is crucial to protect your legacy and ensure the next generation’s prosperity.
Successful farm continuation planning involves seamlessly transferring ownership from one generation to the next. At Palmer & Slay, PLLC, our experienced estate planning attorneys are ready to assist you in creating a comprehensive and effective farm continuation plan. We will work closely with you to develop a plan that addresses your unique needs and goals.
Identifying Your Farm Succession Goals
Thinking about transferring ownership of your family farm to the next generation may come with challenges, especially after working so hard. However, speaking to an experienced estate planning attorney early on can help you understand your options and make informed decisions about your farm and family’s future. Even if you don’t plan on retiring anytime soon, creating a succession plan as soon as possible can protect you, your farm, and future generations. For example, if you become incapacitated due to illness or injury, your succession plan will ensure the farm continues to run smoothly.
When creating a succession plan, consider when you’d like to retire and whether you want the farm to stay in the family. If you’d like your farm to remain a family farm, you may benefit from letting the next generation learn how to manage the land by allowing them to take on greater responsibilities. An important consideration is whether you want to continue drawing income from the farm during retirement. You’ll also need to decide whether you’d like to keep the land in your family’s name. After you identify your goals, the attorneys at Palmer & Slay, PLLC can work with you to create a farm succession plan to achieve your goals.
Long-Term Sustainability for Family Farms in Mississippi
As a Mississippi farmer, you’ve worked diligently for decades to keep your farm profitable. You have likely faced difficult challenges involving difficult weather, unstable markets, injuries, and more. Creating a succession plan for your farm can help you preserve your agriculture legacy as a farmer. When you and your heirs clearly understand what will happen to the farmland, equipment, and other business assets when you retire or pass away, you can ensure the farm continues as seamlessly as possible.
Every farm is unique, and the transition to the next generation of farmers will involve different concerns for every estate planner. Many of the succession planning decisions will involve how to transfer the farmland, machinery, feed, and livestock.
Transferring Family-Owned Farmland in Mississippi
Deciding how you’d like to transfer ownership of your land is one of the most important aspects of creating a succession plan. There are several options available under Mississippi laws. For example, you can transfer your farmland to your beneficiary during your lifetime through a gift or sale.
Alternatively, you can bequest the land to your beneficiary at the time of your death through a will or trust. If you sell the farmland, you can do so through a cash purchase or through installments. For example, your adult child or children may not have enough cash to purchase the land outright but could make monthly installments after they’ve taken over the operation of the farm.
Gifting farmland to your family may help them avoid gift taxes, especially if several people receive ownership of the farm. You can gift up to $15,000 of property annually without paying gift tax. If you gift land to your heirs, they will own the land, and you may need to pay rent if you continue to live on or manage the farm.
Transferring land upon the owner’s death is a common way to transfer farmland because it allows them to continue to earn income from the farm during their retirement. Consulting with the attorneys at Palmer & Slay, PLLC, can help you understand the legal and tax consequences involved in transferring ownership of your family farm in Mississippi.
Succession Planning for Machinery and Livestock
Farm equipment can be among the most valuable assets farmers own. When creating a farm continuation plan, an owner may want to sell the machinery outright to the new owner or in installments. Each option has different tax implications, so it’s important to consult with attorneys and financial planners who can help you limit some of the tax consequences. With careful planning, you may be able to avoid or limit gift taxes, and you may be able to lease machinery to the new owner.
If your farm includes breeding livestock, you may choose to sell some or all of your breeding herd to your successor. If the successor cannot purchase the breeding stock outright, you may choose to continue owning the livestock, but you and your successor may be allowed to act as joint owners of any offspring. You may choose to transfer livestock just before harvest. Another option is to inventory your livestock as part of the transfer so you’d receive payment for the livestock’s inventory value when it’s sold. The proceeds can be divided between you and the new owner.
Contact an Estate Planning Attorney in Mississippi
Creating a farm continuation plan involves making several important decisions about the future of your farm. The estate planning attorneys at Palmer & Slay, PLLC, have an in-depth knowledge of Mississippi estate planning laws. We will work closely with you to identify your goals and create a comprehensive succession plan to implement those goals. If you’d like your family farm to stay with your family, we will create a strategic plan to meet your goals. Contact Palmer & Slay, PLLC, to schedule an initial consultation and learn more.
Palmer & Slay, PLLC, assists clients within Mississippi, including Scott County, Rankin County, Brandon, Flowood, East Jackson, and beyond.