Farm Transfer Toolkit - FIC

Farm Transfer Toolkit - FIC
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Farm Transfer Toolkit
The Farm Transfer toolkit is designed for agricultural landowners who seek to transfer their land, operation, or both to an incoming producer. The toolkit covers key steps in a farm transfer process. It contains information, worksheets and other tools to help users set goals, assess their finances, communicate with stakeholders, and work with professionals to finalize decisions and implement a transfer plan.
Getting Started
Getting Started
Assess Your Finances
Choose Your Tools
Navigate the Process
Finalize Decisions
Farm Transfer Action Plan
Sections
Jump to Section
1.
Identify Who to Engage in the Process
2.
Build Your Team
3.
Identify Values and Set Goals
4.
Understand Your Assets
5.
Assess Your Needs
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Getting Started
As you
begin
the
farm
transfer
process,
it helps to
collect
and organiz
information about the people involved
, your needs and theirs
. This
groundwork helps lay the foundation for you to
stay on track throughout the process.
Describing your
values, vision and goal
help
ensure
a successful
outcome
haring them
with the other party
can help you find common ground. Building trust and communicating effectively speed up the process and help ensure the goals of both parties are achieved.
Visit the
Navigate the Process
tab to learn more and practice these skills. You can also download and print the
Farm Transfer Toolkit
, including all the content and related resources from the online version.
Identify Who to Engage in the Process
Who
has a majo
r interest—or stake—in your
transfe
r?
Stakeholders
mig
ht
nclude
family
members
and/or
incoming producer(s) who will acquire the
assets involved in the
transfer
Other people who may be affected
by the
transfer
include
employees
, tenants,
vendors
, maybe even your neighbors or community members.
Use the
Stakeholder Worksheet
to
identify
and keep track of
all these
people
during your planning process
Use
Stakeholder Worksheet
Build Your Team
Farm or ranch transfers can be complicated, and even when they might seem simple it is a good idea to consult with professional advisors to guide you through the different parts of the process. These advisors become part of your team. They will protect your interests and help you navigate the various steps of the transfer.
Key
professionals to reach out to during the farm or ranch transfer process include:
Certified Public Accountant (CPA)
or otherwise qualified accountant can help you develop financial statements and track your expenses.
An
attorney
can help explain available options based on your specific circumstances and give advice. They can be a good educational resource, review your transfer documents, and draft legal contracts for your specific farm or ranch transfer situation.
An
appraiser
can help you estimate the value of your assets, conduct agricultural assessments for tax purposes, and offer advice on local policies that affect agricultural sales.
financial planner
takes a neutral view of your operation, helping you create a comprehensive financial plan to address future
needs.
This includes planning for retirement, health care expenses, and any funding you may need to transfer your farm or ranch. They can also help you with cash flow analysis and tax planning.
mediator
can help resolve problems and tensions in a neutral and fair way so that conflicts do not threaten
the farm or ranch transfer process. A mediator can help y
ou work through difficult conversations, explore key issues and generate solutions. Tensions and conflicts may arise which a mediator can help manage productively and in a neutral and fair way.
Read the
Build Your Team Information Sheet
to learn about additional experts you may want to work with, including conservation and farmland protection professionals, as well as key considerations and tips for vetting advisors.
Read
Build Your Team Information Sheet
Use
Build Your Team Worksheet
Appraisal Institute Webpage
Guide to Working with a Lawyer
Connect
American Agricultural Law Association Public Membership Directory
American Society of Farm Managers and Rural Appraisers
Certified Financial Planner Board of Standards Directory
Coalition of Agricultural Mediation Programs
Financial Planning Association’s PlannerSearch Tool
IRS Directory of Tax Preparers including CPAs
National Association of Personal Financial Advisors Directory
Identify Values and Set Goals
Your values, your vision or dreams, and your goals guide the transfer planning process. Your values reflect the beliefs that guide your life and actions with friends and family, on the farm, and in your community. Your
vision
guides
where you want to be in the future after you complete the transfer process. It’s important to ground your vision in your values. The
Vision, Values and Goals Worksheet
can help.
In a farm transfer situation, it also is important to learn about the vision, values, and goals of the other party.
Often the needs of an incoming producer are different from those of the
exiting
landowner
so be sure to have an open dialogue and try to find common
ground
to build genuine understanding
Next establish personal and business goals for your transfer situation. Goals should be specific enough to clearly state what you want to accom
plish. Start
with the
Goal Ranking Worksheet
to identify what is important to you.
Then use the SMART goals framework to set useful and actionable goals.
SMART goals are
Specific, Measurable, Attainable, Results-focused, and Timely.
Understanding
your assets and
assessing
your financial position
will
help you
develop
SMART goals
see the
Assess Your Finances
tab
Read
SMART Goals Information Sheet
Values Information Sheet
Use
Goal Ranking Worksheet
SMART Goals Worksheet
Vision, Values and Goals Worksheet
Understand Your Assets
Assets are things that have value.
Tangible assets
are physical property like land, buildings, and equipment and financial resources like stocks, bonds and cash. These have economic value and can be reported on a balance sheet.
Intangible assets
are not physical and may or may not have economic value. They include things like soil quality and access to water, your brand, client lists, knowledge, and management skills. They also include relationships and having close community ties. Farm and ranch transfers may include both tangible and intangible assets.
Identifying and prioritizing your assets helps you focus on
your transfer goals
and
prepare for
negotiations
with the
incoming producer(s)
As you prepare for your transfer consider:
What tangible assets do you bring to the transfer?
What intangible assets do you bring to the transfer?
Do you plan to transfer your property, your operation, or both?
Which of these assets do you think are most important to the other party?
Use
Asset Inventory Worksheet
Assess Your Needs
After you have identified your goals, think about what you need to achieve them. It can be more straightforward to start by considering your material needs – including the tangible assets involved in your transfer. They may include real estate, equipment, and other agricultural assets, as well as income.
It is equally important to assess your deeper personal needs like family relationships, leaving a legacy, or being engaged with your community. These deeper needs also include security and things like a sense of purpose. They are likely reflected in your values which drive your vision and goals. Your feelings are a window into these needs.
The feelings that arise during the transfer process can signal whether or not your deeper needs are being met.
Farming is a way of life—farmers often live and work in the same place, so work and personal life are often intertwined. Your transition may involve more than a change in your work or business role. It may change your role in your family, as well as your day-to-day activities. You may have hobbies that rely on your agricultural resources but are not tied to your farming enterprise. Without addressing your deeper needs, your feelings may derail the process down the road. “Soft issues” are often the “hard issues.” Use the
Needs Assessment Worksheet
to lead you through a process to identify your feelings and needs and decide how to address them in the transfer.
Also consider the other party’s needs and what they might be seeking in the transfer process. What do you know about their current situation, values, vision and goals? Consider what their motivations might be and use the
Needs Assessment Worksheet
to find overlap between your needs and those of others involved in the transfer.
Use
Needs Assessment Worksheet
Assess Your Finances
Next
Sections
Jump to Section
1.
Use Financial Statements
2.
Budget for Future Needs
3.
Estimate the Value of Assets
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Assess Your Financial Position
It is good to have a solid understanding of your financial position to know what you need to get out of the transfer. If you work with a financial planner, they can help you assess your position.
Use Financial Statements
Basic financial statements include the balance sheet, income statement and cash flow statement. Use them to confirm your financial position. You also could ask to review the incoming producer’s financial statements to assess their ability to complete the transfer.
balance sheet
lists your tangible assets and your liabilities—any amounts owed to others. It shows your net worth (the value of your assets minus your liabilities) to provide a snapshot of your current financial position.
An
income statement
is a summary of all sources of revenue and expenditures for a specific time period. A farm’s income statement is typically generated annually and used to calculate the net profit or loss for the entire year. However, some farmers might generate them more frequently for internal analysis.
The difference between your income and expenses represents your
net income –
in other words, your bottom line. If income exceeds expenses, the farm or ranch is generating profit; if expenses outstrip income the operation has a loss. Use the income statement to show your business is profitable and has value and to determine how much income you will need to replace after the transfer.
cash flow statement
records sources of cash and details how it is spent over a time. It includes cash flows from operating, investment and financing activities essentially showing how much liquid cash the business has generated or used throughout the reporting period.
Typically, on a farm or ranch cash flow statements are prepared monthly because cash flow can vary widely from month to month during a calendar year. Use your cash flow statement to show how you spend money over time, based on how much cash is flowing in and out of your business.
Read
Glossary of Business, Financial and Legal Terms
Sample Financial Statements
Use
Balance Sheet Worksheet
Budget for Future Needs
A budget is basically a forward-looking cash flow statement. It estimates future expenses relative to expected income. The easiest way to develop a budget is to look at past spending and think about what is going to change once the farm or ranch transfer is complete.
You can fill out the
Budget and Budget Assessment Worksheets
below to get started.
Use your budget to determine the amount you need to net from the sale of your assets. Consider the costs to execute the transfer, like hiring advisors, providing for heirs, and/or transaction costs (e.g. attorney’s fees, recording fees, taxes, etc.). Things could change considerably after you transfer your farm or ranch. Consider which will stay the same while also anticipating future needs including health care, housing, and so on.
Read
Glossary of Business, Financial and Legal Terms
Use
Budget and Budget Assessment Worksheets
Understanding and Estimating Health Care Expenses Workbook
Estimate the Value of the Assets Being Transferred
Once
you have
identified
and prioritized
the assets you plan to
transfer
estim
at
their value
This will help you
prepare
for
future
conv
ersations with your advisors and key stakeholders
You can use preliminary numbers in your budget to
get a sense of your bottom line.
Fill out the
Financial Assets Inventory Worksheet
to describe your assets and estimate their value.
Think about the value of the asset to the incoming producer. Is it something they need for their farm or ranch enterprise? If not, you may need to sell it to someone else. Also consider the condition of the asset. Places where the numbers are far apart will need further conversation. Formal appraisals can fill in gaps and inform talks later in the process.
Valuing Land and Infrastructure
A good place to begin is by consulting the
Census of Agriculture
and other reports on
Land Values
and
Cash Rents
compiled by the USDA National Agricultural Statistics Service. Consult
Cooperative Extension
and county and municipal experts, such as assessors and building inspectors, who can provide specific, localized information. Private sources include real estate agents and listing services, like Zillow or Trulia. You also can gather information by talking to other producers and/or agricultural service providers.
Review the
Financial Asset Information Sheet
to find common sources of information. For a more definitive assessment later in your process, hire an appraiser.
Valuing a Business
Assigning value to a farm or ranch business is both art and science. Valuation methods range from financial estimates to approximate net profit to estimating each tangible asset separately. This could be based on current market value or the book value from the balance sheet. They include inventorying assets like grain, feed, supplies, and livestock usually determined by current local market prices and other real-life valuations. Other approaches analyze comparable businesses or assess the capitalization rate by estimating the potential return on investment by dividing a property’s net operating income by its market value. Farm Credit or another qualified business valuation specialist can help.
Read
Agricultural Land Values Report
Financial Asset Information Sheet
Use
Financial Assets Inventory Worksheet
NASS Land Values Survey
State and County Estimates for Cash Rents
Connect
American Society of Farm Managers and Rural Appraisers - Find a Land Expert
Appraisal Institute
Cooperative Extension
Farm Credit
National Directory of Real Estate Appraisers
Getting Started
Previous
Choose Your Tools
Next
Sections
Jump to Section
1.
Tools to Transfer Assets
2.
Financial Security and Health Care
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Identify the Right Tools for Your Transfer Situation
The four main ways
to
transfer assets
are
through
gift, sale, inheritance, or lease
You may use one or all of these depending on your
situation
gift
is an asset transfer where the giver receives no payment —or payment less than full market value. A
sale
is an exchange where the buyer pays the owner something to acquire assets, goods and/or services. Sales are the most common type of exchange. The buyer may pay the full value of the property, or the parties may agree to a partial or discounted amount. Payment may be made in a lump sum or in installments.
“A bargain sale”
is part gift and part sale when land or other assets are sold for less than its fair market value. An
inheritance
is when assets are passed on to heirs after the owner’s death. A
lease
is a temporary transfer of some of the rights of ownership. However, lease-to-own and other provisions like written, long-term leases can make leasing a viable tool to gradually transfer the ownership of an asset. Leases also are used for transferring machinery and other assets.
Tools to Transfer Assets
Each transfer is unique. Understanding your own situation and consulting with your professional advisors will inform which tools to use. What follows is an alphabetical list of common tools used to transfer real estate and farm or ranch business assets.
Refer to the
Transfer Tools Information Sheet
for more details.
Transferring real estate and other tangible assets is more straightforward than transferring the business itself. When transferring a business, it also is important to consider how to transfer intangible assets like management skills and responsibility. Refer to the
Business Structures Information Sheet
for more details.
Business Structure
There are four main types of a business structure: Sole proprietorships, partnerships, Limited Liability Companies (LLC), and corporations, including cooperatives and nonprofits. See the
Business Structures Information Sheet
for a detailed description of these types and how they impact the transfer process.
Business structure affects ownership of land and other assets as well as the people and activities involved in the farm/ranch operation. It can limit liability and determine how decisions are made. It affects how assets can be transferred to someone else and may allow gradual transfer over time.
Buy-Sell Agreements
Buy-sell agreements are contracts that enable one business owner to buy all or a portion of a shared business upon the retirement, death or disability of another business owner. It can help determine asset values, outline the process for transferring the business, and provide payment and/or financing terms.
The contract specifies who will buy the ownership interest, how much it will cost, when it will happen, and the terms of the sale. There are three main ways to fund a buy-sell agreement:
avings
life
nsurance
, and
oans. Buy-Sell agreements help ensure an orderly transfer of farm and ranch assets and outline what will happen
in the event of
issolution, divorce, disability, disaster, and death.
Conservation Easements
Conservation Easements are voluntary deed restrictions landowners place on their land to protect natural resources. An agricultural conservation easement
protects working farmland, grassland, and ranchland to keep it available for agriculture.
Selling a conservation easement can generate cash to buy out business partners or other family members, help fund retirement, and create equity among heirs. The donation or sale of an easement can lower the value of your estate which helps make the land more affordable for the next generation.
Heirship Affidavit
The heirship affidavit is a type of sworn statement made to establish the deceased person’s heirs. It describes the relationship of the person making the statement to the deceased party and can be used to transfer property ownership.
Heir’s property refers to land that’s inherited without a will—or inherited by multiple people in equal shares through a will. Heirs hold the land as tenants in common. In this situation, all heirs share an undivided—or equal—interest in the property whether or not they live there, are farming it, or even are aware of their ownership interest.
Life Insurance
Life insurance is a contract that pays a landowner’s designated beneficiaries a cash benefit when the landowner dies. It can provide heirs with immediate liquidity to cover estate taxes and ensure non-farming heirs are fairly compensated. It can facilitate buy-sell agreements if there are multiple owners and otherwise offset financial burdens associated with inheritance and ownership transfer. It also can replace the value of assets that have transferred to another family member, establish trusts, provide for non-farm heirs, or pay estate taxes.
There are two basic types of life insurance policies: Term and Whole Life. Term life insurance is a contract that pays benefits when the insured person dies during the term of the contract; it is the less expensive of the two kinds of insurance. Whole life insurance provides death benefits similar to those of term insurance, but also builds cash value over time.
Operating Agreements
Operating agreements come in many forms depending on business structure. In agriculture they are used when two or more parties have a stake in a farm or ranch by investing capital, contributing labor and management, and sharing income from the operation. Although shared, these are not necessarily shared equally. The operating agreement spells out the terms so that the parties know what to expect and are treated fairly.
Farm Business Operating Agreements often are used between generations working together on a farm or ranch. Often the senior party supplies land and/or other tangible assets, and the junior party contributes more of the labor, but there are many ways to share ownership of assets, like equipment or livestock.
Standard Operating Procedures
Standard Operating Procedures are step-by-step protocols to outline how to complete routine processes and tasks performed on the farm or ranch. They help employees learn how to complete tasks without the need for constant supervision. If the farm or ranch business is being transferred, SOPs can be used to transfer knowledge and skills.
Trusts
Trusts
are legal arrangements where assets are managed by a Trustee on behalf of heirs, receivers, or
other beneficiaries. They provide legal protection for assets
and
ensure assets are distributed according to
the
wishes
of the person or entity that created the trust
. They also
can save tim
by avoiding probate
and
in some cases
reduc
ing
inheritance or estate taxes. The Trust document spells out who will receive
assets
and when, and what happens to the assets when the Trust period ends. In this way, they are used to transfer assets and provide financial security for surviving spouses,
children
and grandchildren.
With agricultural assets like land, structures,
livestock
and equipment, it is critical to
designate
a trustee who is familiar with the operating needs of the agricultural business
Will
A Will is a legal document that expresses a person’s wishes as to how their property will be distributed after their death. Its use should be coordinated with other tools and the owner’s other planning efforts.
If a person dies without a will—known as
intestate
—a probate court applies the state’s intestacy laws to determine distribution among heirs.
Read
Agricultural Conservation Easements
Business Structures Information Sheet
Guide to ACEP-ALE for Heirs’ Property Landowners
Sample Purchase and Sale Agreement
Transfer Tools Information Sheet
Wills and Trusts Information Sheet
Your Land is Your Legacy: A Guide to Planning for the Future of Your Farm
Use
ACEP-ALE for Landowners Toolkit
Agricultural Conservation Easement Program (ACEP) Webpage
Asset Inventory Worksheet
Family Tree Templates
Farmland Protection Directory
UW Guide to Writing Effective Job Descriptions
Tools for Financial Security and Health Care
Both the landowner and the incoming farmer share the goal of financial security and peace of mind. But these may mean different things depending on whether they are entering or exiting. A successful transfer should meet the needs of both parties. In addition to the tools listed above, the following tools can help you plan for future security.
Health Care Proxy
health care proxy—aka health care agent, representative, or
surrogate—is
a person who is legally authorized to make health care decisions for someone who is unable to do so themselves. The person works with the patient’s health care team to ensure they receive appropriate medical treatment. It is a useful tool to handle unexpected medical situations, such as a serious car accident or a stroke.
Health Insurance
Many farmers and ranchers worry about how to pay for health care, especially as they age and retire. This can have affect their transfer plans. Health insurance is the best way to prepare for unexpected medical costs as well as preventive services. The Health Care Information Sheet outlines options including Medicare, Medicaid, and the
Affordable Care Act.
Life Insurance
Life insurance can provide immediate liquidity and can be used to replace the value of assets that have transferred to another family member, establish trusts, provide for non-farm heirs, or pay estate taxes.
There are two basic types of life insurance policies: Term and Whole Life. Term life insurance is a contract that pays benefits when the insured person dies during the term of the contract; it is the less expensive of the two kinds of insurance. Whole life insurance provides death benefits similar to those of term insurance, but also builds cash value over time.
Living Will
A living will states your wishes for treatment if you become terminally ill or injured. Like a health care proxy, it is a useful tool to handle unexpected medical situations.
Long Term Care Insurance
Long term care insurance covers a host of services that are not covered by regular health insurance including help with routine activities and the costs of caring for chronic conditions. Most policies reimburse for home care as well as for care in professional facilities.
Power of Attorney
Power of attorney is a legal document that gives someone else authority to act on your behalf if you are unable to. It can cover financial matters, including making gifts and handling your business affairs, and managing your real estate interests.
Retirement Savings Accounts
Retirement savings accounts are tax-advantaged savings accounts that help people accumulate wealth for retirement.
Both are subject to annual contribution limits.
Common types include Individual Retirement Accounts (IRAs) and 401ks.
IRAs
can be opened by anyone with earned income, including self-employed individuals. The most common types of IRAs for individuals are
Traditional
and
Roth
Traditional IRAs
are tax-deferred, meaning you don’t pay income tax on the money in the account until it’s withdrawn.
401(k)
plans
are sponsored by an employer. A 401(k) allows the employees to contribute a certain dollar amount or percentage of a paycheck to the account.
Roth IRAs
and Roth 401 (k)s are funded by after-tax income so money withdrawn from the account during retirement won’t be taxed.
Read
Health Care Information Sheet
Sudden Impact Graphic Novel
Use
Center for Rural Affairs Retirement Planning Resources
Health Care Insurance Options for Farm Business Operations
Smart Choice Health Insurance Workbook
Assess Your Finances
Previous
Navigate the Process
Next
Sections
Jump to Section
1.
Communicate Effectively
2.
Share Your Story
3.
Build Trust
4.
Manage Stress
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Navigate the Process
Navigating the transfer process requires
effective communication
and
actions to build trust and
maintain
relationships
These lay
the
groundwork for negotiating terms and
finalizing
transfer documents.
Communicate Effectively
Communication is the process of exchanging information, ideas, and feelings with other people. It’s essential to the transfer process.
Communicating effectively
takes time, practice, and preparation. You’ll need to:
Know your audience
Decide what to share
Express yourself clearly
Listen for meaning and
Make requests not demands
Whether it is to convey needs and motivations, make a pitch, tell your story, or address stressful topics, clear communication builds respect, trust and understanding which lead to successful negotiations.
Know Your Audience
Communication is
a two-way street. It is not just about
you
getting
your
message across to another person; it’s about them, too. So think about
who
you are communicating with. Your audiences likely will include the stakeholders on your lists including family members, to the incoming producer, professional advisors, and so on.
As you consider your audiences, p
ut yourself in their shoes. What do they need? What do they want to know? What is their point of view? If you don’t know, you can ask.
Also, consider their age and preferred means of communication. Nationwide, five generations are actively involved in farming and ranching and they each communicate in different ways
—see the
Communicating Across Generations Information Sheet
Will they respond best to a text, phone call, or face-to-face conversation?  Finally, reflect on what your audience wants to know. Tailor your message and how you deliver it to be best understood
Decide What to Share
Once you have thought about your audiences, decide what you will share with them to achieve your goals. You likely will start with the details and logistics of the transaction. Be prepared to share information about the assets being transferred, how much they are worth, the means of transfer, and a schedule for transferring them.
Remember to address your deeper personal needs and invite the other party to share theirs. Refer to your updated
Goal Ranking Worksheet
and step 3 in the
Needs Assessment Worksheet
. Consider
an
iceberg. The visible
portion
only
represents
a small part of the issues at play.
The part below the surface, the motivations and values, may actually be more important.
If you
don’t
address deeper needs, they may
sink
the entire transfer process.
Express Yourself Clearly
People convey information using verbal and nonverbal communication.
Verbal communication
uses words and includes speaking and writing.
Body language
and eye contact are forms of non-verbal communication.
When speaking to others, think before you speak. Use familiar words and active language. In a formal situation, make sure you are prepared. It may help to start with an outline or bulleted list for the main points you want to make. If you are making a presentation, practice with another person or in front of a mirror. Follow your talking points to be sure you share important information.
When you communicate through writing—whether a text or a contract—reread what you’ve written to make sure clearly states what you mean to say. Check for spelling or grammatical errors; don’t rely on spell check.
Also pay attention to body language. Consider what you may be communicating through eye contact, posture, gestures, and facial expressions. How you enter a room, lean forward or back, nod or shake your head may put your audience at ease or make them uncomfortable. If you don’t know what puts them at ease, mirror their body language. Also pay attention to what the other person’s body language is telling you.
Listen for Meaning
Listening for meaning helps you understand what is important to others. P
ay attention to what the other person is really trying to say, to their tone and body language, not just to their words. Remember the iceberg analogy. Listen for what is above and below the surface.
To show the speaker you are listening, wait until they finish speaking before preparing a response. Look at them and keep your body language open. You also can show you’re interested by asking clarifying questions to learn more and encourage dialogue. To confirm you understand what they’ve said, repeat back what you heard.
Make Requests, Not Demands
An effective communi
cator
asks for
things in a way that
encourages the other person to be
open to what you are saying
Making
equests
help
the
other
person understand what they can do to meet your needs
ffective request
are
specific, doable, and result in
a positive
action.
In general, r
equests
are framed by
using “I” instead of “
ou
messag
es.
Read
Communication Skills Information Sheet
Communicating Across Generations Information Sheet
Use
Goal Ranking Worksheet
Needs Assessment Worksheet
Share Your Story
During the transfer process, you probably will need to explain what you are trying to accomplish and why. Describing the history of your farm or ranch, how you built your business, or why you placed a conservation easement on your land conveys your values and goals in a compelling way.
As you develop your story, consider sharing your personal history and the legacy of the land. Highlight key moments, challenges overcome, the values you instilled in the farm, and the future vision you hope to see carried on by the next generation. Anecdotes can make your story relatable and memorable.
Read
Storytelling in Agriculture: Crafting Compelling Narratives
Use
Prepare to Tell Your Story Worksheet
Build Trust
Building trust leads to successful transfers.
Trust gives people a sense of security and confidence when dealing with each other. It is based on honest communication and considering each person’s point of view. It can be given and taken, earned and broken so it is important to build trust with the people involved in your negotiation. To build trust, practice the following behaviors:
Be Transparent.
Be open about what you want, need, and plan to do—transparency.
Tell the Truth.
Be honest with yourself and with others.
Show Respect.
Consider the other person’s point of view
Be Accountable.
Take responsibility for your actions and words. Apologize for any missteps or mistakes.
Keep Promises.
Keep your word. Don’t overextend and commit to doing things you will not or cannot do just to reach agreement.
Give Appreciation and credit to others.
Give credit where credit is due. Show you care.
Read
The 13 Behaviours of High Trust - FranklinCovey
Use
Cultivate Trust Worksheet
Manage Stress
Farm and ranch transfers can be stressful. Stress can interfere with the brain’s ability to use logic and reasoning. It limits your ability to receive and absorb new information or really hear another person’s point of view. The Hand Model of the Brain, developed by Dr. Dan Siegel, explains how the brain functions to help manage stress. The following strategies can help you regulate your emotions and maintain calm by restoring the connection between the rational and emotional centers of the brain. You also can use these strategies to support other people involved in your transfer.
Breathe.
Deep, slow breathing can reduce stress because it activates the body’s parasympathetic nervous system. This slows the heart rate, decreases blood pressure, and results in a more relaxed state of mind.
Exercise.
Exercise has a positive impact on the nervous system by influencing hormone levels and neurotransmitter activity, promoting relaxation and reducing stress and anxiety.
Identify your feelings.
Name your emotions and physical sensations – either out loud or in your thoughts. This helps re-engage the logical part of your brain.
Reframe to the big picture
. If you encounter tension or conflict, step back to look at the broader context–like the impact on family or friends. Shifting your focus can relieve stress.
Take a break or meditate
. Shift your focus to something else, spend some time in nature, or simply walk away to calm down your nervous system.
Be with someone who understands
. An empathetic listener can help calm you down. This can be a trusted friend or family member, or a trained professional.
Read
Hand Model of the Brain
A Quick Guide to the Hand Model of the Brain
Watch & Listen
Dr. Daniel Siegel Presenting a Hand Model of the Brain
Cultivating Resilience Podcast on Succession and Legacy
Use
National Farmers Union Online Farm Stress Training
AgriAbility Farm Stress and Mental/Behavioral Health Resources
Choose Your Tools
Previous
Finalize Decisions
Next
Sections
Jump to Section
1.
Prepare to Negotiate
2.
Negotiate Terms and Record Decisions
3.
Implement the Plan
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Negotiate and Finalize Decisions
The final steps are to draft a proposal, arrange the negotiation, decide on terms, and
finalize
key agreements and documents.
Once a baseline plan is in place, you will need to review it on a regular basis until the transfer of assets is complete.
Plans can take years to fully implement.
Prepare to Negotiate
Negotiation is a strategic discussion to reach an agreement on matters of mutual interest. Build on the work you’ve done to build trust, communicate your needs, and learn about the people you are negotiating with. This will increase the likelihood of success by ensuring the transfer meets the needs of everyone involved.
Genuine understanding of each other’s needs- both the material and deeper personal needs will help you as you move towards negotiating a deal.
Draft a proposal. Use the
Prepare to Negotiate Worksheet
to outline specifics including assets being transferred, price, details of the transaction, ownership structure and a timeline for the transfer. Make sure you can articulate what matters most to you and why. This will help sustain understanding and connection throughout the process.
For a negotiation to succeed, both parties need to reach agreement
Will your proposal address the other parties’ needs? Consider the common outcome you both wish to achieve. If there are areas of disagreement, brainstorm solutions. But don’t forget your bottom line. Sometimes negotiations don’t work out. If not, the sooner you recognize this, the sooner you can move on.
Plan Logistics
Once you have initial agreement, conversations can turn to the logistics of the negotiation.  Decide who will schedule the meeting and where it will take place. If you are concerned that the negotiations may be difficult, consider holding them in a neutral place, like a professional advisor’s office.
Identify the people who have authority to make decisions. If multiple people are involved, it is helpful to agree on how decisions will be made. Several models can be used to guide group decisions. See the Prepare to Negotiate information sheet). Also identify the professional advisors you need to complete transactions. Confirm any supporting documents you need to bring to the negotiation.
Read
Communication Skills Information Sheet
Glossary of Business, Financial and Legal Terms
OSU Negotiation Strategies
Overcoming Three Types of Biases
Use
Needs Assessment Worksheet
Prepare to Negotiate Worksheet
Accessing Farmland Together Decision Tool
Negotiate Terms and Record Decisions
Now it’s time to agree on the specifics: which assets will be transferred, how much they are worth, the means of transfer, and a schedule for transferring them. Keep your budget and deeper personal needs in mind to make sure you are clear about areas where you can compromise and where you might have to walk away.
You still may need to go back and forth before you come to a final agreement. To get to “win-win” use effective communication, trust-building behaviors, and strategies to manage stress. Remember your vision, values and goals and rely on your support network to get you across the finish line.
Once you’ve reached agreement, be sure to write down and record your decisions. You will need different types of documents depending on the tools you are using to transfer assets.
Use the
Farm Transfer Action Plan
to list the documents you need to execute the transfer. Indicate who is responsible for preparing the documents, steps needed to finalize, and a date to complete them.
Implement the Plan
It is not enough to finalize terms and agreements. You also need to implement your plan. Be sure to follow through on your decisions and ensure documents are signed. Implementation can take several years, especially if you are transferring a farm or ranch business, or if you are transferring assets as part of your estate.
Until all your assets are transferred, it is important to revisit your plan. You may need to revise it, especially after major life events. It is a good idea to check in with your advisors to help you stay on track.
Navigate the Process
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Farm Transfer Action Plan
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Sections
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1.
How It’s Organized
2.
How to Use It
3.
Use the Plan
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Farm Transfer Action Plan
The Farm Transfer Action Plan is for agricultural landowners and the people advising them. It may also be useful for other stakeholders including family members and incoming producers. The plan can help you get and stay organized. It encourages clear communication and supports making decisions and taking actions.
The Farm Transfer Action Plan builds off the content in the Farm Transfer Toolkit. We recommend reviewing the other tabs in the toolkit first. You will find content on the webpages and links to related worksheets, information sheets and other resources. Fill out the worksheets to collect information, practice skills and prepare to work on your transfer action plan.
How It’s Organized
The plan is organized into five sections that draw on toolkit content but present the information in a different order. This encourages you to integrate key concepts, like communicating effectively, and to apply what you learn. We reference specific toolkit tabs and resources throughout the plan to connect you to more information if you need it.
Section one asks you to identify the main people involved in your transfer process and to list actions to take to build and sustain trust with them.
Section two
encourages you to
take stock of where you are and clarify what you want to achieve through the transfer.
Section three supports drafting a proposal that addresses your needs.
Section four helps you plan important conversations and develop strategies to manage stress.
Section five prepares you to finalize discussions and negotiate final terms.
How to Use It
When you are ready, start at the beginning of the plan and fill in what you can. Tackle one section at a time. You will likely go back and forth between the toolkit and the plan as you move through the process.
If it is easier, you can opt to print out the plan, toolkit, and related resources if you prefer hard copies! Or, you can choose to work online. When filling out worksheets or the plan, just be sure to save copy!
Until you have transferred all your assets, revisit your plan on a regular basis. You may need to revise it, especially after major life events. It is a good idea to check in with your advisors to help you stay on track.
Use the Plan
American Farmland Trust developed the Farm Transfer Toolkit and Action Plan with support from the USDA Natural Resources Conservation Service as part of its Land Transfer Navigators program.
Download AFT’s Farm Transfer Action Plan
To learn more about the Land Transfer Navigators program visit:
farmland.org/land-transfer-navigators
Finalize Decisions
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Download and Print the Toolkit
Farm Transfer Toolkit
Download a copy of the Farm Transfer Toolkit. It is a fillable, printable document that includes all the content and related resources from the online version.
Note: The information on this page is not a substitute for good legal and financial advice. Be sure to seek the professional assistance you need to complete your farm transfer plan.
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