Transitioning the Farm to
the Next Generation
By: Jordan Martinez, Lauren Mayo, and Donna M. Amaral-Phillips, Ph.D.
With a majority of dairy farms in the United States being family-owned and operated, transitioning
the farm to the next generation is a key component to the continued success and future survival of many
operations. The transition process is complex and must be done properly to avoid serious financial and
family relationship consequences. Considering there’s no standard way to transition a farm, keeping
these key points in mind will be a helpful guide:
Create a transition and personal estate planning team. This team should contain two units, the
producers and the professionals. The producer part of the team should include both the entering and
exiting parties of the operation, and spouses of the parties involved. Including siblings that are not
involved in the transition will allow the exiting parties to communicate their wishes for the farm before they
retire or pass away. Professionals may include: the farm attorney, accountant, tax and financial
consultants, and an extension agent. Adding professional consultants to the team can help facilitate an
open, honest, and respectful channel of communication. This can insure that both entering and exiting
party’s goals can be met with the transitioning of the farm.
Establish Goals. Individual, family, business and retirement goals should be established by the
producers to give the professionals a direction in creating the transition plan. These should include what
each individual does or does not want for the farm, their family, and themselves. First, each person
should individually create a list of his or her short and long term goals. These goals should be specific,
measurable, attainable, realistic, and have a time frame for implementation. Once each member has their
individual list, each generation should combine their lists, prioritizing them together. Lastly, both
generations should meet, discuss their prioritized lists, and prioritize the goals into a final list. Once this
list is finalized, take it to your team of professionals so that they can develop a plan to fit your combined
and agreed upon goals. Have the entire team meet once this plan is developed to discuss how it should
be executed.
Do not over think the transition process. Many decisions are involved in the transition and personal
estate planning process that are outside the expertise of the farmers involved. Trying to decide between
different transfer strategies, such as sole proprietorships or partnerships and corporations, may confuse
and frustrate you and inhibit you from moving forward. Involve the experts to help you decide the best
means to accomplish your goals. The producers involved in the transition should be responsible for
implementing the plans made by the professionals.
Put everything in writing. The transition plan should be written and copies provided to all members
involved in the transition. Establish a timeline in which the transition is to be completed. Because of the
extensive amount of assets to be transferred with a dairy operation, a realistic time frame may be 10 to 15
years.
Communication is key. Hold family business meetings throughout the transfer process to ensure the
progress is in line with everyone’s goals. Considering the long time frame of the transfer process,
meetings should be held annually to review goals and revise them as needed. Without effective
communication, mutual respect and trust, the transition process can be extremely stressful and straining
on family relationships.
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