Skip Navigation Documents in Portable Document Format (PDF) require Adobe Acrobat Reader 5.0 or higher to view,download Adobe® Acrobat Reader.
BTC Bank

Missouri Farm & Ranch Succession Planning Guide

Agriculture is one of America’s oldest industries. In Missouri, it’s a celebrated tradition. Today, there are nearly 100,000 farms in our state, most of them family-owned. While operating a family agriculture business has its rewards, there are also challenges. Succession planning is one of the biggest challenges, but it’s crucial to preserving the legacy and heritage of your family farm.
Missouri is home to nearly 100,000 farms.
Adaption, technological advancement, and planning. These are important traits in any modern business, but especially family farming. Agriculture has always had its risks, from bad weather to insects. Success requires some luck and a lot of hard work. If you want to pass your family farm to the next generation, you need to start planning the hand-off years in advance.
BTC Bank has been agriculturally-minded since our founding in 1919. We created this guide to farm and ranch succession planning from our years of experience working with local farm families. If you have questions as you read it, feel free to give us a call.

Benefits of Farm Succession Planning

You may be wondering if farm succession is something your family needs to plan for. If everyone is already on the same page, why go through the time and expense of drawing up formal documents?
The simplest answer is peace of mind. Like any good estate plan, your farm succession plan will document your wishes and create a legally binding framework for the inheritance, sale, or distribution of assets after your death. It can also help you plan for retirement.

Primary benefits of farm succession planning
Most of all, the farm succession planning process will help you realize that fair doesn’t always mean equal. In order to prioritize the continuance of your farm, you may need to treat your “farm kids” differently than your “non-farm kids.” It’s better to work this out in advance than to go through a messy family conflict upon the death of a parent.

The three primary benefits of farm succession planning are:
  • Economic security
  • Family harmony
  • Continued viability of the farm


Working the land and raising livestock are both physically demanding jobs. Even if you want to keep farming forever, you may not be able to. This is where a succession plan comes in, and the earlier the better. Remember that you are working to ensure economic security for the entire family, including the retiring parent(s). Try to start planning at least 10 years before you actually plan to transition ownership. You can begin by asking these questions:
  • Do I have enough saved for retirement?
  • If not, what will my primary source(s) of retirement income be?
  • Where will I live (if not in my current farm residence)?
  • How will my spouse and I afford long-term healthcare coverage?
The average Missouri farmer is 58 years old

Family Harmony with Multiple Heirs

When you have multiple children with different preferences for working the farm, there are several options for succession planning that achieve family harmony.
  • Separate farming and non-farming assets.
  • Divide the farm into more than one operation, so each child gets their own plot to do with as they wish.
  • Sell the farm and split the proceeds evenly among heirs.
There are benefits to succession planning even if you don’t have any heirs…
What if you don’t have children, or none of your kids want to farm? If you still want to preserve the viability of your farm, consider renting the land and equipment to a neighboring or beginner farmer. This option also provides rental income to support your retirement.
Another option is to donate the farm and equipment to a non-profit organization. This comes with the benefit of avoiding estate tax, although it also eliminates cash income for your retirement.

Key Considerations for Farm Succession Planning

  • How ready are you to start this process? The farm succession process may involve difficult conversations and strong feelings for you and your family members. Prepare yourself by considering your willingness to discuss business matters with your kids, treat them like equals, give them an easier path than the one you had, and so on. Overall, passing on the farm means handing over control, too. You may have to watch your child(ren) make mistakes and even lose money.
  • Is the farm worth anything? You may not be able to answer this until you take a closer look at your balance sheets. For now, keep it in mind as another possible outcome. If the farm is too in-debted, for example, there may not be enough value to pass on.
  • Do you want to divide all of your farm and non-farm assets equally among your children? If this proves impossible, can you settle for fair instead of equal? How do your kids feel about the prospect of one person inheriting the farm and the others getting a portion of your non-farm assets?
  • What kind of future do you envision for your family farm? Are you willing to let your children decide what to do with it once the succession goes through? Or would you prefer to create a plan for them to follow?
  • If you distribute your farm equally to all of your children, will they be allowed to sell it? You may want to add a clause giving your kids the first right to purchase the farm. Also, consider protecting the farm from a child’s divorce or lawsuits.
  • Taxes: Avoiding and minimizing taxes is one of the main objectives of any estate plan, including farm succession. As you consider different options, keep the tax implications of each choice in mind. For example, establishing a trust offers protection to both your heirs and your assets.

A Step-by-Step Process for Planning a Farm or Ranch Succession

Farm Succession Planning Steps

Keep in mind that this is meant to be a slow and steady process, not an overnight decision. In fact, succession planning is like farming itself: there are many small steps from planting a seed to selling a crop. You can follow our instructions in the order listed below or find a structure that best fits your family.

  • Review the farm’s current balance sheet with your financial advisor. Are there enough assets for your children to take over the farm while you enjoy a comfortable retirement?

  • Consult with an accountant who specializes in agricultural taxes. You want to explore the tax implications of various succession plans before you make a final decision.

  • Talk to your family members. You may think you already know their wishes, but it’s always better to check in and give everyone a chance to express their opinions and feelings. This is also a good time to list the goals you and your heirs have for the future of the family farm.

  • Set a target retirement date. This decision should also be made together as a team.

  • What needs to happen between now and your retirement date? The necessary steps may include a gradual reassignment of labor and responsibilities, training, transfer of assets, financial planning, and a variety of “Plan Bs” for the unexpected, such as an early death.
  • Compare the current state of your family farm to your heirs’ future goals for it. For example, do they want to make it more profitable, update operations to make it less labor-intensive, explore a new type of crop, get more involved with the local ag community, and so on?

  • List all of your farm and non-farm assets. Also take stock of the ownership percentages of each asset. For example, do shareholders or a bank own part of an asset or do you have 100 percent ownership?

  • Review the farm’s debts. Will you pay them off before handing over the farm, or will your heirs need their own financing agreements?

  • Keep your business structure or consider a change. You may want to restructure as a partnership, if you’re not already. For example, a joint venture is a type of partnership for a limited time period or specific project. On a farm, one partner could own land while the other owns equipment.. Joint ventures offer some protection from liability and taxes.

  • Assemble a team of professionals. Many of these steps can and should be accomplished with the help of an experienced ag professional, such as an attorney who specializes in farm and ranch succession, an accountant, and a financial advisor/estate planner. Once you and your family have identified your goals and wishes, your team will help you put them into writing.

  • Review your succession plan on a regular basis. Unforeseen circumstances, market conditions, and personal preferences can all change your succession plan over time. Review it once a year or so between its creation and implementation to keep it up-to-date.

Best Ways to Transfer a Family Farm

When it comes to farm and ranch succession planning, there isn’t a one-size-fits-all approach. Here are three ideas for transferring the farm based on your goals.

  • Rent the land and buildings. For families in which the next generation doesn’t want to keep farming, you could sell your operational assets while creating a rental agreement for the land and structures. This gives you an immediate windfall of retirement income while providing cash flow for your heirs.

  • Divide farm and non-farm assets between heirs. If your kids are split between those who want to farm and those who don’t, you can pass on your assets accordingly. Remember the principle of “fair isn’t always equal.” Even if the farm assets have a greater value, it’s important to empower the heirs who want to farm with control over the land and operations.
  • Split farm assets among farming heirs who don’t get along. You may have multiple kids who want to keep farming but don’t get along well enough to work together. In that case, give each their own smaller farm to do with as they wish. 
With farm succession planning, fair isn’t always equal. You may need to treat your “farm kids” differently than your “non-farm kids”.

For example
In “Farm Succession: A Case Study,” the Heusinkveld family describes how they are keeping their dairy farm in the family:

“We kind of set up a plan 18 years ago, using an LLP, that allowed Nate [the adult son] to buy more shares of the LLP over time...Nate is also in the process of buying out the shares of my brother, Steve, who was also in the operation when Dad (Cleon) retired.

The regular purchasing of shares functions as a kind of 20-year pension plan for Steve and Jeff Heusinkveld. ‘This plan also helps on taxes,’ says Nate. Steve and my Dad don’t get a big tax bill in one year as a result of a huge buyout.’”

Because of a succession plan’s complex nature, a team that includes a lawyer and accountant is indispensable in helping evaluate the legal and tax implications of different business structures and vehicles, like trusts, used to transfer assets and operations. A professional team will also complete the paperwork required to prepare a formal succession plan.

Partner with BTC Bank for Farm & Ranch Succession Planning

We are community minded...just like you! If you’re looking for a local partner with deep experience in the Missouri agriculture industry, the Trust Services Department at BTC Bank has a century of experience providing Estate & Trust Administration services to Missouri farmers. To learn more about how we can help with your specific farm or ranch succession planning needs, contact us today or visit a local branch in Albany, Beaman, Bethany, Boonville, Carrollton, Chillicothe, Gallatin, Lamoni, Maysville, Osborn, Pattonsburg, or Trenton to speak with an experienced financial advisor.
Retirement Pie Chart icon


We can help you pursue independence, freedom and the things that matter most to you.
Piggy Bank Icon


Saving for that special occasion, children's education, home improvement, or travel?