Navigating Farm Succession Without a Family Heir: A Practical Guide

By Jessica Groskopf
Extension Educator, Agricultural Economist

Every day when I would leave for work, and again when I would come home, I would walk past our key basket at the front door and see his keys in there. Walking past that basket was this constant little reminder that he was deployed, (physically gone), you know, overseas, but he was always here with me, (psychologically present), in my thoughts.

A colleague of mine shared this story with me about her personal experience embracing change and coping with an ambiguous loss during her spouse’s deployment in 2010. Hearing that story got me thinking — what are those transitions, those moments, that give us that same feeling? And especially when we're looking at big changes, like what happens when there isn't anyone willing to take over the farm or ranch?

In my work with agricultural families, I’m increasingly encountering a difficult but growing reality: many farms and ranches today have not identified a successor from within their family. This absence of the next generation can simultaneously simplify some aspects of estate planning while deeply complicating others, particularly the emotional side of grieving the end of era.

This guide is aimed at helping farm and ranch owners who are facing this crossroads. In it, I’ll explore essential steps such as the legal documents you’ll need, identifying suitable non-family successors, and tools that can make the transition smoother. I want to begin with the emotional toll that this situation can take.

For many, the idea of not passing the family operation on to a family member isn’t just a logistical transition, it’s a deeply personal loss. This feeling often manifests as ambiguous loss, a type of grief that lacks clear closure or recognition. Unlike the death of a loved one, ambiguous loss stems from the absence of something we hoped for or envisioned. In this context, the ambiguous losses many farm and ranch owners feel are often unspoken but profound: the grief of watching a dream, sometimes generations in the making, begin to fade. 

If you’re experiencing this kind of grief, please know that you’re not alone, and your feelings are completely valid. Common feelings may be disappointment, frustration, or even guilt that your children or grandchildren have chosen a different path, despite your efforts to prepare them for taking over your operation. These emotions should be shared and discussed with family members. The intimate feelings deserve to be acknowledged and addressed before you move forward with any formal planning.

Many of us elect to dive into logistics and paperwork of farm and ranch succession, but taking time to process the emotional side of this transition is essential in addressing the loss and grief. Here are a few approaches that may help you cope with the grief and gain clarity as you chart your path forward:

1. Think Outside the Box
   Your legacy doesn't have to end with your family. Step beyond tradition and consider creative succession plans—like mentoring a trusted employee, working with a neighboring producer, or partnering with a conservation group. Legacy is about values, not just lineage.
    
2. Talk Honestly as a Family
   Have open and honest discussions with your family. Understanding each other’s feelings, values, and decisions can help ease emotional strain and pave the way for constructive planning.
    
3. Seek Outside Perspectives
   Don’t be afraid to look beyond your immediate circle. Agricultural consultants, extension educators, and estate planners can offer objective advice and resources tailored to your situation.
    
4. Listen With Respect
   Each family member will process this differently. Be willing to hear what others have to say and acknowledge differing views and emotions.
    
5. Take a Break When Needed
   Sometimes stepping away from the issue, whether it’s for a weekend or a season, can provide clarity and emotional reset. 
    
6. Understand the Impact of Change
   Accept that transitioning to a non-family successor may involve structural, cultural, and operational shifts. Try to view this as an evolution of your legacy, not an end.
    
7. Share How You Feel
   Whether with your spouse, a counselor, or trusted friend, don’t bottle up your feelings. Talking them through can reduce stress and reveal insights you hadn’t considered.

While the grief of ambiguous loss can feel overwhelming, it doesn’t have to define the rest of your story. This guide explores the nuts and bolts of transitioning your business to an unrelated party. The legacy you’ve built matters, regardless of who carries it forward. With thoughtful planning and emotional readiness, you can shape a future for your farm or ranch that honors your hard work and vision.

Once you’re emotionally ready to begin planning, the most important question to ask yourself is: “What do I want to happen to my farm or ranch business when I die?”

I emphasize business because planning isn’t just about distributing property like land, equipment, or cattle. Your true legacy may lie more in the values, knowledge, and opportunities you pass on than in the physical assets themselves. Before reading on, take a moment to write down your answer.

Here are three typical responses I hear from owners in this situation. In each case, “my heirs” can also mean a nonprofit, church, conservation group, or other entity:

1. “I want my assets to be sold, and the proceeds distributed to my heirs.”
2. “I want my heirs to keep and own this land.”
3. “I want someone to continue the operation—not just sell it to the highest bidder.”

Your answer determines your next step: an estate plan, a transition plan, or both.

If your answer resembles #1: You’re focused primarily on an estate plan, which outlines how your assets should be handled after death. The benefit of this option is that you can make detailed decisions ahead of time — what gets sold, how proceeds are divided, and how taxes and legal issues are addressed.

If your answer is like #2: You’ll need both an estate plan and a transition plan. An estate plan will ensure the land ends up in the hands of your heirs, but a transition plan prepares them for ownership. This may include establishing ownership structures, teaching lease and contract negotiation, or helping them understand marketing and land management. Keep in mind, if your heirs aren't involved in agriculture, the land may eventually be sold — especially if multiple heirs can’t agree on how to manage it.

If you relate most to #3: You’re likely looking for a non-family successor — perhaps a long-time employee, your current tenant, or a local young producer eager to carry on the work. This path is the most complex, requiring both a solid estate plan and a carefully thought-out transition plan. It involves identifying the right person, mentoring them over time, and gradually transferring responsibility. When done well, it’s incredibly rewarding — for both parties — but it does take time, trust, and careful legal planning.

Before we dive deeper into planning, we need to establish a team of advisors that you know, like, and trust to help you develop a comprehensive strategy. At minimum this team should include an attorney and a tax professional. Depending on your needs, you might also include a financial advisor, insurance agent, agricultural lender, and any other professionals that will play a role in implementing your plan. 

Each advisor brings a unique perspective. One of the biggest mistakes I see is relying solely on an attorney. While legal advice is critical, the best outcomes often result from collaborative input across multiple disciplines. Here are my recommendations for having successful meetings with these advisors: 

1. Clarify your vision: Before meeting your advisors, ask yourself: What do I want to happen to my farm or ranch when I die? This answer becomes your team’s guiding star in shaping a realistic and effective plan.
2. Gather Financial Information: Be prepared to share a full list of assets and debts, both personal and business. Include details on ownership (e.g., joint ownership, LLCs, partnerships) and bring supporting documents like leases or buy-sell agreements.
3. Meet as a Group: Avoid playing the middleman. Bring your advisors together in one room or in a virtual meeting to discuss possible solutions collaboratively. It might cost more now, but it will save you time, money, and stress later.
4. Speak Up About Your Concerns: Be open about your fears or risks you want to avoid. These discussions help your team narrow down the best options.
5. Be Transparent: Incomplete or inaccurate information is a common reason why plans fail. Be as honest and forthcoming as possible. Your advisors are there to help, not judge.
6. Stay Open-Minded: Don’t assume a tool or strategy will, or won’t, work based on your neighbor’s experience. Trust your advisors to offer solutions tailored to your unique circumstances.
7. Own the Final Decision: Remember, you are the CEO of your farm or ranch. The final call and the responsibility to carry out the plan rests with you.

Planning isn’t just about legal documents, it’s about clarity, communication, and preparation. When you come to the table with a clear vision, accurate financials, and a willingness to speak openly, you give your advisors the tools they need to build a plan that truly works, not just one that exists on paper.

Once you've answered the critical question, “what do I want to happen to my farm or ranch when I die?,” and you have identified a team of advisors, your next step is establishing a basic estate plan. 

Regardless of your long-term goals, these four foundational documents are essential:

1. Healthcare Power of Attorney
   Names someone to make medical decisions if you're unable to. Without it, loved ones may be blocked from involvement due to privacy laws.
    
2. Healthcare Directive (also known as a Living Will)
   Outlines your medical care preferences in serious situations, ensuring your wishes are known even if you can’t speak for yourself.
    
3. Power of Attorney
   Authorizes someone to handle financial matters—like paying bills or managing leases—if you become incapacitated.
    
4. Will
   Ensures your assets are distributed according to your wishes after death. 

Anyone over 19 should have these four documents in place. They’re relatively quick and affordable to set up and can be updated as your plans evolve. The first three protect you while you're alive but unable to act on your own behalf; the will takes effect after death.

Occasionally, someone will say, “I understand having the healthcare and power of attorney documents in place now, but I’ll do the will after I finalize everything else.” I urge you not to delay having a will drawn up. I’ve seen people pass before their full plans came together. A will acts as a safety net, catching any loose ends, so your intentions still shape what happens to your remaining assets. Without a will in place, the state will decide how your assets are distributed, which can lead to unintended and unfavorable results. Furthermore, I encourage you not to take shortcuts on the will. Often, writing a will yourself or using an online program rather than an attorney licensed in Nebraska will cost much more in legal fees once you have passed, than it saves you today. 

Earlier, I posed a tough but essential question: What do I want to happen to my farm or ranch when I die?  The related, and often revealing, question is: What outcomes are unacceptable to you? The answers often revolve around seven common concerns that strongly influence your succession planning.

1. Retirement Planning - Many producers plan to work for life, but health issues often force retirement. Yet, according to USDA, only 40% of eligible operations contribute to retirement accounts. Having a livable income when you are no longer able to work may depend on selling or leasing farm and ranch assets or working an off-farm job.
    
2. Long-Term Care – Because of the high costs, planning for long-term care is critical. Long-term care averages $10,000 per month for 2–3 years. Funding options include insurance, self-pay, or qualifying for Medicaid. But Medicaid eligibility has strict rules, and rural facility options can be limited. Medicaid has a five-year lookback period. In other words, assets gifted or sold within five years of needing care may count against Medicaid eligibility.
    
3. Capital Gains Tax - Selling appreciated assets, like land, during your lifetime can trigger significant capital gains taxes. One way to avoid this is by passing assets at death, which allows for a step-up in basis and may reduce tax liability. Learn more at go.unl.edu/amcu. 
    
4. Depreciation Recapture – An often overlooked issue when selling depreciated assets like equipment, is depreciation recapture. This tax that is incurred when the sale price of an asset exceeds it’s tax basis. Sale proceeds are taxed as ordinary income. 
    
5. Probate – Probate is the legal process of re-titling assets that pass through your will. It can be costly, slow, and public. Ways to avoid probate include using tools like life-estate deeds, trusts, payable on death and transfer on death designations. While some seek to avoid probate, in Nebraska, estate details still become public due to the state’s inheritance tax.
    
6. Federal Estate Tax – In 2025, estates over $13.99 million are taxed at 40%. While many estates are currently estimated to fall below this threshold, the threshold may change in the future. This tax also has a lookback period, assets gifted within three years of death may still be taxed. Strategies to reduce estate size include unlimited gifts to a spouse who is a US citizen, annual exclusion gifts ($19,000 per recipient in 2025), and paying qualified medical or educational expenses directly to an institution. 
    
7.  Nebraska Inheritance Tax - Nebraska is one of six states with an inheritance tax. Rates depend on the size of the inheritance and the heir's relationship to the deceased. It is extremely difficult to avoid Nebraska Inheritance Tax. Learn more at go.unl.edu/v2tf.

When creating your succession plan, it’s also important to consider personal concerns, such as a spouse remarrying, heirs with disabilities, addiction issues, divorce risk, or financial instability. These factors are often overlooked in standard plans, yet they can significantly impact the tools chosen to achieve your estate and transition planning goals. 

There is no single estate or transition plan that will fully eliminate these concerns. Each situation is unique, and the strategies you choose will require careful consideration of both the financial implications and personal impact. When you meet with your team of advisors, identify the possible concerns, and explicitly discuss strategies to mitigate these risks. As you explore your options, weigh the costs and benefits of each approach in the context of your specific goals. The best plan is the one that fits your goals and circumstances, even if it requires tough trade-offs.

Helping someone outside the family doesn’t mean shortchanging your heirs. There are ways to support other producers while still allowing heirs to retain direct or indirect ownership of land. Often, this means creating a legal agreement that allows someone, like an employee, tenant, or neighbor, to lease land from your heirs, company, or trust.

Now where does the lease agreement come into play? It depends on what other estate and transition tools (wills, trusts, companies, etc.) you are using. Work with your advisory team to know exactly how to structure your lease agreement. Here are the specific clauses the agreements should cover as it relates to leasing to an unrelated party of your choosing.

1. Basics – Any valid lease in Nebraska must contain the names of the landlord and tenant(s), a legal description of the land to be rented, the rent amount or share-percentages, the dates of the lease, and signatures of both the landlord and the tenant. Remember, if the land is in a trust or company, that entity will be listed as the landowner.  If the lease agreement is longer than 1-year, it must be filed at the county courthouse in order to be valid. I do not recommend referencing a specific lease rate, i.e., “the USDA County Average Rental Rate”. This can make it challenging for families, when the rate was not reported that year, or the survey or reference no longer exists.  
    
2. Transfer of Property – When implementing a comprehensive estate and/or transition plan, often property is transferred or re-titled. Including a clause in the lease agreement that states any transfer will be subject to the lease’s provisions will help protect the tenant.
    
3. Binding on Heirs – A “binding on heirs” clause ensures that if you die while leasing property your heirs will be subject to the terms by the agreement.  
    
4. Amendments – The terms and conditions for making amendments should be clearly outlined in the lease agreement. Often, leases will require amendments to be in writing and signed by both parties. This is important to allow both parties some flexibility within the lease.
    
5. Termination Clause –If the tenant is not performing well, there needs to be a defined process for your heirs, trust, or company, to be able to terminate the lease. This is vitally important to protect your heirs from a bad tenant. 

For examples of lease agreements visit: https://aglease101.org/doclib/

While setting up a lease agreement for your heirs can be useful, it can cause some additional challenges. First, your heirs will need to have the resources to maintain the property. The cost of property taxes, insurance, irrigation maintenance, etc. should not be taken lightly. Moreover, your heirs need to have the business acumen to be able to manage the property. It should be your top priority to make sure they are prepared for this role. If no one is prepared for this responsibility, consider the use of a farm management company. 

When there’s no family successor, your legacy can still live on through thoughtful planning. Lease agreements allow you to support someone else in farming or ranching while providing an opportunity for income for your heirs. 

Earlier, I encouraged you to think differently about your legacy. It doesn’t have to end with your family. You might consider offering opportunities to employees, tenants, or neighboring producers.

Helping someone outside the family doesn’t mean shortchanging your heirs. Often, this means creating an agreement that allows someone, like an employee, tenant, or neighbor, to buy assets from your heirs, trust, or company. In order to ensure that your wishes are carried out, you might consider an option-to-buy agreement as a part of your estate and transition plan. 

In an option-to-buy agreement, the person you want to have the option (i.e. an employee, tenant, or neighbor) is referred to as the “holder.” This agreement grants the holder the right, but not the obligation, to purchase the property. If the holder fulfills the terms outlined in the agreement, they can force the property's owners (i.e. your heirs) to complete the sale.

Here are the six basic terms that should be included in an option-to-buy agreement.

1. Who has the option? First and foremost, the agreement must identify the holder. Often, this is a single person. 
2. Exactly what can they buy? Include a legal description of the property. 
3. What is the timeframe? There are two critical time-related elements that must be addressed. First, how long does the holder have to decide if they want to purchase the property? Second, how long do they have to pay for the property? 
4. What is the price? The option-to-buy agreement must specify the price or include a formula for determining it. Avoid vague terms like “book value” or “fair value,” as they can lead to disputes. Instead, consider using more concrete valuation methods such as tax-assessed value or appraisals. You may also choose to include a discount as part of the pricing structure, if appropriate. 
5. When does the agreement apply? Often, in the context of estate and transition planning these agreements trigger at your death. 
6. How will the transfer be funded? Possibilities here include cash, an installment note, or life insurance. Life insurance backed buy-sell agreements are discussed in detail here: https://go.unl.edu/tc8y

Where do these agreements come into play? It depends on what other estate and transition tools (wills, trusts, companies, etc.) you are using. I implore you to have a professionally drafted agreement and review the agreement with your heirs. Make sure the holder knows how to exercise the option to comply with the terms. Additionally, if this agreement is for real estate, it should be recorded with the county register of deeds.

Helping someone outside the family doesn’t mean shortchanging your heirs. Often, this means creating an agreement that allows someone, like an employee, tenant, or neighbor, to buy assets from your heirs, trust, or company. As discussed earlier, using an option to buy agreement can unintentionally force your heirs to sell property, which may not be your intent. Instead, you might prefer to offer someone the chance to buy only if your heirs choose to sell. These types of arrangements are known as preemptive rights, and they come in two main forms: Right of First Offer and Right of First Refusal.

A Right of First Offer gives someone the first opportunity to purchase the property if the owner decides to sell. There are two common ways this can be structured: either the owner initiates the offer to the holder, or the holder makes the first offer to the owner. If the holder makes an offer that the owner considers too low, the owner is free to pursue a sale on the open market. However, a typical condition of the agreement is that the property cannot be sold to a third party for less than the holder’s offer. 

A Right of First Refusal gives someone the right to match any third-party offer before the sale is finalized. This right must be disclosed during a sale or auction, and it may discourage buyers, potentially lowering the sale price.

It should be noted that someone can hold both the Right of First Offer and the Right of First Refusal, giving them two chances to buy the property. 

Right of First Offer and Right of First Refusal agreements are different from option to buy agreements, because they do not force the sale, and the price is not defined within the agreement. As discussed earlier, the agreement will still outline who can hold the right, a description of the property, the timeframe, when the agreement applies, and how the agreement will be funded.  neither a Right of First Offer nor Right of First Refusal guarantees the holder the property. These agreements only create opportunities for the holder.

Recall the essential question: what do you want to happen to your farm or ranch business when you die? A common answer is that owners want to sell their assets and simply distribute the proceeds from these sales to their heirs. 

This strategy is often undervalued as a viable solution when the next generation isn’t returning to the business. What is the key reason this strategy deserves more recognition? Control. 

Selling assets offers you the ability to manage some of your greatest end of life concerns on your own terms. It's typical for farmers and ranchers to liquidate depreciable assets such as machinery and livestock during their lives, but they often hold onto land and other significantly appreciated assets until they pass away, allowing their heirs to receive a step-up in basis.

Selling assets during your life provides you with the most control over when and how assets are sold, allowing you to generate income necessary for retirement and long-term care, while managing your income taxes, capital gains taxes, and recapture of depreciation. 

The key to selling assets while you are alive is having a strategy that often involves selling assets throughout the end of your life rather than all at once. Although “retirement auctions” are popular, they may not be the most tax efficient way to handle the sale of depreciated assets because you not only have to manage income tax, but you will also have to deal with capital gains taxes, and depreciation recapture. Consider selling assets over a 5-to-10-year period. Spacing out sales of large collections can help retain the value. Additionally, you can potentially time the market, selling items when it is most advantageous. 

Another benefit to selling assets during your life is that you can control who they are sold to. Want to help your tenant, distant family member, or neighbor get started? This can be a great way to pass on your legacy that can benefit everyone. 

The third benefit is accurately preparing and pricing assets for sale. Often, I see heirs who are overwhelmed by the amount of stuff that needs to be sold. This can cause heirs to overlook valuable items.  Additionally, heirs may not take the time to clean, organize, and research the value of items, leading to lower sale prices. By selling assets while you are alive, you can prepare them for auction and select the best platform to sell them on. Private treaties, Facebook, eBay, and farm auction companies can all be used. 

While this seems simple, selling assets during your life does require planning. Work with your team of advisors to develop an asset dispersion strategy, making sure you have adequate income, while minimizing your tax liability.