Succession Planning: The Finer Details

By Lindsay Humphrey

02 /12 /24

No matter what size operation you’re in, financial planning means the difference between a year in the black or a year in the red. When it comes to succession planning, charging forward without a financial gameplan could spell disaster for you, your operation and your family.

Jacob Reed is a financial advisor based in Dallas, Texas, whose background in the agricultural industry gives him a leg up when helping clients from that sector. While the business he started three years ago isn’t specifically geared towards succession planning for farmers and ranchers, he’s seen his fair share of exactly that.

“What most people don’t want to talk about is how much their family will have to pay in taxes if they pass away,” Reed said. “There’s a lot going on with succession planning because of all the tax information that goes into it and how often tax laws change, which essentially happens every four years. Once stuff gets going, you’ll mostly get grandfathered in for a lot of things, but succession planning is mostly about keeping a handle on taxes.”

That’s where Reed and people like him come in handy since it’s their job to keep up with tax law. There’s a reason why the independently wealthy pay less in taxes and it’s generally because they’re more informed about those laws.

Reed explained that he looks at taxes as a type of game where knowing the rules is the only way to pay less and ultimately win. He’s the type of person who finds playing that game enjoyable and rewarding which can only benefit his customers.

“Obviously this is my job and I get paid to do it, but to help a family set up their estate so they can both retire and pass it on to the next generation is very rewarding,” Reed said. “A lot of families don’t have a succession plan and that’s a good way to essentially kill the farm because of the taxes that come up when someone passes away.”

The farms with the biggest risk are the ones worth $10 million or more. With just over two million total farms in the U.S., the average value per acre in 2023 was around $4,000. If the average farm covers about 440 acres, that operation’s value in land alone is exceptionally close to the two-million-dollar mark. If you add in buildings, equipment and other assets, it likely doesn’t take long to reach that $10 million threshold (Source: Here in the Midwest where land values average above $10,000/acre many farms are worth more than $10 MM.

Case and point, if you own an operation of any size then you need a plan of succession. As we’re in an election year, some might believe that it would be to their benefit to keep putting it off until after November. Succession happens in life and being prepared for the best transition is important.

“Some people wonder if their tax liabilities and obligations for their operation will be different based on the political party in the oval office,” Reed explained. “Realistically, it doesn’t matter enough to hold off succession planning.”

One of the key factors to a successful transition is adequate life insurance. It’s one of the best ways to mitigate tax risk while passing on the farm to the next generation. However, there are ways to get the transition started without anyone passing away first.

“Every year you can start gifting up to a certain amount, I think its $18,000 per child and $36,000 per couple right now,” Reed said. “But all in all, it’s a process. You can’t just magically give something away without being taxed on it. Those amounts are under the gift inheritance tax.”

Essentially, tax laws change every four years as new administrations take over at the White House and in Congress. However, once you get the ball rolling on a succession plan, you can get grandfathered into a lot of things. But that’s a lot of information to keep up with alongside running a family operation.

That’s why bringing in the experts isn’t a want, it’s a must. There are many experts. Halderman recommends seeking professional advice from someone who knows agriculture and farm operations. While Nationwide Insurance provides a free tool for this exact process, there are other resources available to you:

Nationwide Ag Insight Center:

Farm Bureau Financial Services:

Farm Commons:

AgWest Farm Credit:


7 Tips for Farm Succession Planning: