Recently, I was an exhibitor at the Fort Wayne Farm Show, which gave me the opportunity to meet with farmers not only from all across Indiana, but from several surrounding states. I came away with several observations, of which I’d like to share with you in this article.

Overwhelmingly, the farmers I spoke to indicated that they wanted their farm to stay in their family.

However, I was surprised at how few of the farmers I spoke to indicated they had a plan in place that would ensure a smooth transition and keep the farm in the family. Conducting some research after the Farm Show, I found that my results were in line with recent surveys.

A particular survey of farmers indicated that only 36 percent of the farmers had some sort of estate plan, which means about two-thirds of the farms did not have a long-term strategy.

Further, 82 percent of farmers indicated they did not have an exit plan for retirement, nor did they know how to create one. Even more alarming is that 88 percent of farmers in the survey planned to rely on the government or the grace of God to ensure the transfer of assets and the continuation of the family farming business.

Don’t get me wrong, I put a lot of faith in the man upstairs, less on the government, but realize as individuals we create our own destiny. That’s why on my farm, we’ve taken action to create an estate plan that ensures a smooth transfer of the farming operation to the next generation.

Simply put, doing nothing is easy, but probably will not foster the continuation of your farming operation.

Additionally, I was surprised at the fundamental lack of understanding of how federal estate taxes and Indiana inheritance taxes impact a farming operation. For example, one gentleman told me that at his death Uncle Sam was not getting any of his farming operation. When I asked him how that was the case, he told me it was because he was leaving his farm to his children. I tried to explain the whole “death and taxes” thing to him, but he seemed convinced that because he did not list Uncle Sam as a beneficiary in his will, Uncle Sam would not obtain any of his farming operation.

Sadly, I think there are a lot of farmers out there who use this kind of ostrich approach when it comes to federal estate taxes and Indiana inheritance taxes.

Also, I was shocked at the number of people who had set up a trust in their estate plan and were sure that the trust would enable them to avoid estate and inheritance taxes. I would then ask them if that was the case, wouldn’t we all have trusts set up and none of us would have to worry about these taxes? Yes, a trust may help alleviate taxes, but many factors come into play as to whether it will or not.

Lastly, it has been suggested that the average age of the farmer in the United States is now roughly 62 years old. At the farm show, I did see numerous representatives of the younger generations, but I did observe many more heads with graying hair than without. I wondered to myself where agriculture in this country is headed if the older generations fail to plan for transition to the younger generations.

Sadly, I’m of the opinion that a vast majority of farming operations could experience continuity if only the proper planning would be used.

In light of the above, over the next several articles I will start from “ground zero”, if you will, and discuss the elements of estate planning for farmers. My hope is that readers can come away from these articles with understanding, among other things, as to why estate planning is necessary, identify what inhibits people from performing estate planning, and provide thoughts as to what a complete estate plan should contain.

After the conclusion of the series on estate planning, I will request readers write with questions so as to address any lingering confusion, difficulties or otherwise. I look forward to the upcoming discussions.

John J. Schwarz, II, is a farmer and attorney in Steuben County, Ind. He focuses his practice on agricultural law and legal issues important to farming communities. He can be reached at 260-665-9779 or jschwarz@cresslaw.com

These articles are for general informational purposes only. If you have a specific legal question, you should consult an attorney.

The views and opinions expressed in this column are those of the author and not necessarily those of Farm World.