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Illinois | First and foremost, ask him what he’d like to do in the coming years. None of this is really your choice. It’s all his. If he seems wiling to formally retire at some point and willing to completely hold the operation together under your leadership, then offer to buy out his share of the equipment and his net worth of the non-land portion of his operation on a long-term (10-15 years) contract at full market value. Don’t ask for or expect any handouts. The “handout” from him is agreeing to extend the contract terms for that length of time where you can cash flow it.
If he wants to continue working after his formal retirement, pay him a fair salary. He’ll have nice retirement income with the contract, salary and cash rent.
Make a cash rent agreement, again at market value, on his farmland for the same length of term as the other contract. From there, it’s his choice to draft an estate plan to leave his farmland and cash assets how he chooses. Any non-farming heirs should appreciate that there was no “early handouts”, and they’ll benefit from whatever land and cash assets he chooses to pass on to them in his will. | |
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Farm succession
