Aging farmers can face tough choices as retirement nears


The average farmer is 58 years old, and nearly a third are over 65, but many are having a hard time retiring. “Farm operators who don’t have children willing to take over often end up selling to developers or neighbors who may be near retirement themselves. When farmers do have a son or daughter ready to take the reins, poor financial planning, family infighting or lack of communication can still leave descendants no choice but to sell the farm,” Sophie Quinton reports for Stateline.

The result of this turmoil: “Between 1992 and 2012, almost 31 million acres of farm and ranch land have been taken out of production, according to American Farmland Trust, a nonprofit based in Washington, D.C. That’s an area the size of New York state,” Quinton reports. Since 63 percent of farmland will need a new farmer in the next 25 years, even more farmland could be taken out of production if measures are not taken to help aging farmers pass on their farms.

In Colorado, where the average farmer is 59, the state Agriculture Department is considering ways to help retiring farmers, such as supplying mediators to help work out legal issues. One mediator, Colorado State University Extension Agent Todd Hagenbuch, told Quinton it’s more complicated to turn over a farm than a typical business: “It’s a family, it’s a business, it’s personalities, it’s history, it’s all wrapped into one big thing . . . And that makes it exceptionally complex.”

Another problem: farmland and equipment are expensive, but farming profits are often low and uncertain, so it’s hard for young would-be farmers to afford to buy and run a farm. But retiring farmers need that liquid cash when they sell, since most of their assets are wrapped up in land and equipment rather than liquid cash. Selling to a family member is complicated too.

“To avoid estate taxes, farm families need to wrap their assets in trusts, limited liability companies and limited liability partnerships,” Quinton reports. “They need mechanisms to allow a retiring farmer without a 401(k) to continue to draw income from the farm after his child takes over ownership. They might need livestock leases, conservation easements or options to purchase.” Since many rural tax and estate planning specialists are also retiring, such services can be in short supply.

Written by Heather Chapman

The Rural Blog

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