Survey shows North Carolina farmers need help with estate planning
Jul 5, 2006 9:41 AM,
By Roy Roberson
Farm Press Editorial Staff
A survey by the North Carolina Farm Transition Network, Inc, reveals that a majority of North Carolina farmers could have a better plan when it comes to passing their farms to the next generation of producers.
Conclusions from the survey data suggest that without increased planning and decision making, many farms that have the opportunity to remain in production are at risk of being converted to non-farm uses.
NCFTN, in partnership with the North Carolina Department of Agriculture and Consumer Services Agriculture Statistics Division and supported by the North Carolina Tobacco Trust Fund, commissioned the 2005 survey in cooperation with the international FARMTRANSFERS project to learn more about North Carolina farmers’ plans for the future of their farm assets.
The survey went to a random sample of 3,042 farmers and resulted in 2,099 responses, a response rate of 69 percent. The average age of respondents was 59 years.
“What we don’t learn from USDA’s five year agriculture census is whether farmers have committed to any retirement or estate planning, or their thoughts on passing their farm to a successor,” says Andrew Branan, executive director of NCFTN. “This survey provided some key insights, and the data suggests that more planning and professional assistance is needed.”
One of the key questions in the survey was: If you become a farmer, do you have a job for life? Almost half of North Carolina’s farmers said “yes” with a response that they never plan to retire. Another 35 percent plan to semi-retire, still operating the farm while receiving retirement benefits like social security or pensions. Of the 18 percent of farmers who plan to retire, they expect to do so at age 65.
The survey showed that 67 percent of respondents have not discussed their retirement plans with anyone, including family members. Though not a large enough number, 25 percdent percent have begun discussions with their families. However, fewer have consulted with a professional advisor such as a financial planner, which ranked highest over lawyers and others at 7 percent.
Of the farmers surveyed, 43 percent of those responding indicated they have made no decision on how their assets will be distributed at their death because they have not executed a will. Life insurance was the most commonly reported estate planning tool, with 70 percent of farmers having some life insurance in place. The survey did not ask farmers how much life insurance they held, nor whether it would meet family goals for farm continuation.
Almost 75 percent of North Carolina farmers have not identified someone to manage their farm after they retire. Of the 26 percent who have named a successor, most often this successor was a son or daughter. The average age of successors is 33 years, with 50 percent currently working off the farm.
When asked how they intend to pass on their farm, 33 percent reported an equal division, whereas 22 percent reported they would like to keep the farm as “one unit” or “in the family”, and 31 percent declined comment.
“If a farmer values that their land remain in agricultural production after they’re gone, this will require advance and sustained decision-making to minimize risks associated with transferring farm assets between generations,” says Branan. “As we consider how much acreage will be available in the future for farm production in our state’s economy, retirement and estate planning decisions made now will have a major impact,” he adds.
e-mail: rroberson@farmpress.com
EDITORS NOTE — For more information on the survey results or NCFTN, contact Andrew Branan, executive director, North Carolina Farm Transition Network, at (919) 782-1705 extension 8290 or abranan@ncfb.net.
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