Area farmers learn how to prepare for retirement
Farmer Vaughn Sgross-Rhode said he believes that it’s never too soon to start planning for retirement.
“I know that I am not going to farm forever,” the 62-year-old said, noting he’s been in the farming industry most of his life. His farm is located just outside of North Bend.
Sgross-Rhode isn’t the only farmer with these feelings. Numerous other farmers from around the area took the opportunity Tuesday to learn the proper steps into retirement during the Ag Transition and Estate Planning Workshop held at the Platte County Nebraska Extension office in Columbus.
“I am at that stage in life where I have two sons and some help and later, eventually, we would have to turn the farm over,” Sgross-Rhode said. “We wanted to get some ideas on possibly how to do it properly.”
The session was led by Allan Vyhnalek, extension educator and farm succession in agricultural economics educator at the University of Nebraska, as well as Tom Fehringer, attorney at Fehringer & Mielak LLP in Columbus. They both spoke about the different steps farmers should take in preparation for retirement, from making sure they have a detailed plan to ensuring farmers have assigned their power of attorney.
“So there are really two issues,” Vyhnalek said. “One issue is that you’re just retiring and you have no one to pass that business on to… The other issue is, what if you have a farm where you have somebody that’s going to take over that operation? … and so that’s a whole different set of planning that has to take place.”
Vyhnalek advised attendees to begin their retirement plans early, which will inevitably help them make better decisions along the way.
Vyhnalek said many farmers make the mistake of buying new equipment just as their retirement draws near to avoid paying income tax, but in reality, these actions can prolong tax payments.
For farmers who already have successors in mind, Vyhnalek said, it’s important to make sure they’re ready to take on the responsibilities moving forward while keeping in mind that different generations have different ideas about how a farming operation needs to run.
“Will the next generation do all the tasks?” he said. “Better know if they’re committed to the farm or not.”
Letting go of a business people have invested so much time and effort into can be tough, Vyhnalek said, which can make the retirement process difficult for some farmers. He said there are farmers who can’t let go of their businesses even after retirement, resulting in them overstepping their reach with their successors.
“You can’t put them in charge and then trump everything they do,” he said.
Vyhnalek advised farmers to gradually let go of their operations, allowing the next generation to slowly pick up on the different task while letting them learn from their own mistakes, as long as those mistakes don’t jeopardize the business.
Sgross-Rhode said he’d already begun discussing retirement plans with his family members but still hasn’t made a written plan, which he learned is an important step during the workshop.
Vyhnalek said it’s important for members of the family to understand each other’s expectations. He added surprises can only lead to problems.
“If you’re not careful with your planning, you can end up with bad feelings amongst the kids and you can end up with a bad tax liability if you’re not careful,” he said. “Communication is key.”
Fehringer focused his presentation on the legal end of retirement, covering topics like power of attorney and taxes. He said the first step farmers should take before retiring is to appoint their power of attorney for asset management and healthcare.
“Be smart on who you pick,” Fehringer said.
Fehringer said spouses are generally the logical choice, followed by their children. He said when people fail to appoint their power of attorney before they retire or die, family members have to submit a petition to the court for guardianship and conservatorship, which costs more money and time.
“Humans are the only creatures on earth that know it’s going to die, yet fail to prepare for it,” he said.
Natasya Ong is a reporter for The Columbus Telegram. Reach her via email at firstname.lastname@example.org.