Tim Christensen – Farm Management Specialist
As a Farm Management Specialist for Iowa State University Extension and Outreach, I have had the privilege to work with farm families across the state as they transition their assets and farm businesses to the next generation. We have all heard the tragic stories of families being ripped apart while going through this process. I have personally seen many of these stories unfold in real life. More importantly, I have seen some families thrive during times of transition and come through the process stronger than when they started. So today, I would like to examine the traits and characteristics that those families possess that helped them succeed when others did not. Before we dive into it, I would like to also point out that these topics go for all family businesses and are not exclusive to the Farm. Family-owned hardware stores or other businesses have the same struggles.
The most important thing is that the families I work with who are successful have the ability to communicate effectively. If families cannot communicate effectively, they are doomed to fail. The older generation must be able to communicate their expectations of the future to the younger generation. I hear all the time things like “If Jonny really wanted to take over the family farm, he would not have taken that job in town”. Has anyone let Jonny know that taking over the family farm was an option? The younger generation must communicate their plans and dreams for the future. We must also have hard discussions. Sometimes things are just not going to work out. Families that can have those hard talks and get things out on the table so everyone knows where they stand and can move forward have a greater chance of success.
Successful family businesses are organized. Knowing what you have, and how it is titled, is key to success. When there is clear and transparent bookwork to go along with the business, it is a lot easier to build a plan to transfer a business. If there is no organization, it is difficult to establish trust when things are unclear.
The last one I will mention is being educated. There are a lot of people and businesses that are trying to sell you things to make this process easier. There are a lot of tools out there, like revocable trusts, irrevocable trusts, charitable remainder trusts, LLCs, and corporations, to name a few. These are all incredibly useful tools in the right situation. Just make sure you get the information from someone with you and your family’s best interests in mind, not their own pocketbook. Finding trusted advice can be crucial to making sure you are using the right tools for your family. Iowa State Extension and Outreach Ag Decision Maker website: www.extension.iastate.edu/agdm and the Center for Ag Law and Taxations website: www.calt.iastate.edu are good places to find that trusted information.
At the end of the day families that can communicate, be organized, and get educated have a greater chance of planning a successful transition to the next generation. If you’re interested in learning more about the farm transition process ISU Extension and Outreach will be hosting a Farm Transition Program on December 11 and 18 at the Lyon County Extension Office. Learn more and register at go.iastate.edu/FARM2025.