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NC State Extension

Farm Transition and Succession

This page will feature articles, resources, presentations, templates and links to support decisions related to organizing and transferring farm assets for continued productive use. Topic key words include: Land and Farm Business Succession, Leases and Options, Business Entities, Estate Planning (wills, trusts, powers of attorney, etc.), Trustee and other fiduciary powers

This portal’s particular focus is “farm business succession,” the development of strategies and tactics to transfer working assets (e.g. supporting a business concern) so as to minimize any disruption in the income streams from (and costs of managing) such working assets. Farm succession (also popularly called “farm transition”) will include business entities (e.g. limited liability company), titling of assets, contracts, leases, business valuation, use of life insurance, and communication.

Content loaded to this portal, including narratives, workbooks and presentations, is supported by The North Carolina Tobacco Trust Fund Commission (TTFC) (Grant award 2019-001-16), titled “An Heirs Guide to Farmland”). The workbook “Planning the Future of Your Farm” was supported by a previous TTFC Grant)

Planning the Future of Your Farm (workbook download)

This comprehensive workbook – first published in 2006 and updated in 2018 – contains useful narratives and worksheets to assist with developing your estate planning and business succession documents. The PDF of the workbook can be dowloaded here. An accompanying presentation can be downloaded here.

Getting Into Farming (workbook download)

This workbook is a basic introduction to aspiring farmers on pursuing their farming aspirations. It includes worksheets and narratives on budgeting, planning, record-keeping, seeking land for lease or purchase, setting up a business entity, etc. It was produced by Andrew Branan and others affiliated with National Center for Appropriate Technology under a Beginning Farmer and Rancher Development Program Grant. The workbook can be downloaded here.

Presentations

Farming Together Agreements. (link to come)  This presentation (first delivered at Carolina Farm Stewardship Association annual Sustainable Agriculture Conference, 2019, covers the topic of farm transfer focused on transactions between unrelated individuals. Topics include leases, appraisal, purchase process, sale of going concern business and business valuation, and limited liability companies.

Timberland Transfer and Liability. This presentation is delivered to various forestry groups across North Carolina. Addresses estate planning, present use value, and trespass liability (including timber trespass).

Topic Materials (uploads in process)

(LEASES) Keeping Farmland in Farming: A Look at Farm Leases from both Landowner and Producer Perspective  This narrative reviews the farm lease tenure relationship from the landowner’s side and from the farmer’s side, with perspectives each should consider when reaching an agreement for the use of farmland.

(LAND TITLE) An Overview of Titling of Real and Personal Property  This narrative reviews the basics of how land and other property may be owned.

(WILLS AND TRUSTS)

(BUSINESS ENTITIES)

Templates

(LEASES) Lease Memorandum Template (Multi Parcel) This is a template for a Memorandum of Lease listing multiple parcels owned by a landowner to be farmed by one producer entity, and recorded with the county register of deeds. Under North Carolina law, a lease in excess of three (3) years must be recorded to protect the leasehold on land transferred to a new owner (e.g. sold, gifted or inherited).

(LEASES) Sample Letter Terminating a Verbal Farm Tenancy. This template letter may be used to advise a farm tenant, who is farming the land on an oral agreement (without a written lease), that their tenancy will end at the end of the year. Under North Carolina law (N.C.G.S. §42-14) an annual tenancy must be terminated no less than thirty (30) days prior to the end of the tenancy. By law in North Carolina, agricultural tenancies run from January 1 to January 1, so notice must be received by the tenant no later than November 30. HOWEVER, in certain counties, N.C.G.S. §42-23, mandates that verbal agricultural tenancies run from December 1 to December 1 to December 1, so notice must be received by the tenant no later than October 31. Such is applicable to the following counties:  Alamance, Anson, Ashe, Bladen, Brunswick, Columbus, Craven, Cumberland, Duplin, Edgecombe, Gaston, Greene, Hoke, Jones, Lenoir, Lincoln, Montgomery, Onslow, Pender, Person, Pitt, Robeson, Sampson, Wayne and Yadkin. The attached template can be modified depending on which county the parcel is located.

(LEASE) Pasture Lease

(LEASE) Whole Farmstead Lease (including residential structure)

(LEASE) Silvopasture Lease

(EQUIPMENT LEASE) Simple Equipment Lease (Small Farm)

(BUY-SELL) Buy-Sell Agreement Template (for LLC Operating Agreement)

(OPTION) Right of first refusal and Option to purchase

(ASSET PURCHASE) Asset Purchase Agreement (Five Year Amortization) (Purchase assets from LLC)