WILLIAMSPORT, Ind. – Farmers may sometimes shy away from conversations about succession planning and insurance, but an agricultural insurance adviser said both are necessary topics for families wanting to keep the farm in the family.

“It’s a very emotional topic,” explained John Kay, a partner with Financial Strategies Group (FSG), LLP. “Today, farmers’ minds are on the availability of inputs, the cost of inputs, the cost of commodities. At Thanksgiving and Christmas, when you sit down with the family, no one wants to talk about what they are going to do when they die.”

When clients approach FSG with questions about their farm’s future, Kay and his staff use the resources of Nationwide Insurance to help those clients rank their priorities and goals for their operations. Nationwide is the largest agricultural insurer in the country, he said.

More than a decade ago, Nationwide created its Land As Your Legacy planning service, which partners with companies such as FSG to aid in planning a future for a family’s farm, the insurer said. The company, at no cost to the client, said it develops a transition plan focused on five key areas – succession planning, business planning, risk management, financial independence, estate planning – to help protect the future for the business and family.

According to Nationwide, about 96 percent of U.S. farms are operated by families, and only one in three of those families has a transition plan in place.

FSG has their clients fill out a Nationwide-provided planning workbook that asks them to rank their goals and objectives. Included on the list of potential goals are successful transition of farm, expand the farm, reduce income, take care of aging parents, pay off debt and provide for spouse and/or dependents in the event of death, disability or long-term care.

The workbook asks clients questions about farm income, expenses, mortgages, liabilities, other debts, assets and retirement.

Also included in the workbook are questions for both spouses to answer regarding personal and business goals. For example, it asks how each spouse would like their estate to be distributed at death, if they think the surviving spouse could manage the family or business finances, and what they would like to see happen to the business in the event of death.

“The workbook helps farm families put all their thoughts together,” Kay pointed out. “The most important thing is to ask tough questions mom and dad, or grandma and grandpa, may not know how to ask themselves. This is the farm family’s homework. This is your investment in this. You’re going to put some time and thought into this. You have a lot of assets, you just can’t let them go to chance.

“The more mom and dad put pen to paper, the more they’re thinking about things. Preservation of land and preservation of farmland ownership inside the family is so crucial to our country. They’re not making anymore farm ground. The protection of farmland from one generation to the next is huge. That’s a great thing we’re trying to preserve, protect and grow.”

Kay asks clients to fill out a separate worksheet with questions such as does the next generation want to continue farming, can the family conduct a productive business meeting about the farm without heightened emotions, and has the transition plan been shared with all key active and non-active members of the operation.

“I have each spouse fill it out,” he said. “When you take a look at the questions, mom and dad will answer them differently sometimes. When clients get our packet, at the end of the day, someone has to make a decision. They have to decide how they want (the farm) divided among farming and non-farming kids. Others will just divide one-third, one-third, one-third, because they don’t want to make those hard decisions.”

Kay sends the completed planning workbooks to the Land As A Legacy team of financial advisers and attorneys. The team will send back options for the farm family to consider. Once the clients hear the options, it’s up to the family to decide how to proceed, he said.

Kay and his team will have several in-person meetings with their clients. He will offer suggestions on how insurance might help deal with some of the family’s concerns. Long-term care and assisted living are big issues for some farmers, Kay noted. “We are huge in addressing that long-term planning is as important as succession planning,” he stated.

FSG will go over other insurance policies the family may have, such as life, property and liability. Kay said they want to make sure families have adequate coverage. “If they do their own chemical spraying, do they have adequate liability? What’s the net worth of the farm? If you put a driver in a semi and he runs into someone, are you protecting your net worth?”

Beginning in 2026, the federal estate tax exemption could drop from current levels. In 2022, the exemption per individual was about $12 million. Under federal law, the exemption will fall to about half of that starting on Jan. 1, 2026.

“A farm family could potentially have, if they’re large enough, a federal estate tax bill,” Kay said. “The federal tax has to be taken care of first, which may hinder their ability to transition to the next farmer in the family or transition to non-farm members.”

Kay said it’s a privilege to visit with their farm family clients.

“Farm ground is near record highs in many places,” he said. “Farm families are sitting on a tremendous asset. They could sell but that may be the last thing they want to do. A multi-generational farm, it’s a family thing. It’s a unique deal.”

For more information, visit FSG’s website, www.fsgllp.com, or www.nationwide.com/yourland.