Beyond the day-to-day operations of running a berry farm is the prospect of securing your legacy for the future. Explore planning options along with actionable steps to fuel long-term growth for generations to come.

Legacy Planning Options for Berry Farms

Note the three following approaches to legacy planning, each having its own distinct structure, potential perks, and guidance checklist.

• Cooperatives (co-ops)
• Equity sharing programs (ESPs)
• Private equity investments

Co-ops

A co-op is owned and operated by a group of farmers who pool their resources to achieve common goals. Sharing resources can lower individual costs for equipment, marketing, and distribution. A community of farmers who band together can gain collective bargaining power to negotiate better prices and access larger markets, while gathering crossover knowledge and experience. These coopted efforts can also enhance sustainability practices, thereby contributing to long-term viability.

Joining or forming a co-op can allow for the practices and values of your farm to continue after you step back from the day to day. Co-ops can also open mentorship opportunities to younger farmers so that knowledge and traditions can be passed down.

Co-op Audit and Tax Preparation Checklist

• Conduct or arrange for financial statement audits or reviews to ensure transparency among members.
• Assess and document internal controls over cash, inventory, and member transactions.
• Review cooperative tax filings to comply with IRS cooperative-specific rules such as patronage dividends.
• Explore eligibility and apply for agricultural grants or subsidies, allowing for proper tax reporting.
• Establish procedures for ongoing financial reporting and member communication.

Equity Sharing Programs (ESP)

ESPs involve partnerships between landowners and investors that allow both parties to share the risks and rewards of farming operations. This can give berry farmers access to capital for expansion, new technology, or infrastructure improvements without the burden of debt.

These partnerships can also introduce valuable business expertise and industry knowledge from investors, which can enhance farm equity sharing arrangements. The flexibility of an ESP can also have custom-tailored terms to meet the unique needs of farmer and investor alike.

Engaging in an ESP can help secure the financial future of your farm while upholding your vision and values. This partnership can facilitate the transition of the farm to the next generation when investors seek to maintain the farm’s legacy rather than a quick return on investment.

ESP Audit and Tax Preparation Checklist

• Perform due diligence audits to evaluate farm financial health and operational risks before partnership formation.
• Work with tax advisors to structure the partnership agreement for optimal tax treatment of income, losses, and depreciation.
• Prepare and file partnership tax returns (IRS Form 1065) and provide K-1s to partners annually.
• Arrange for regular farm and asset valuations to determine equity shares and facilitate future buyouts or transfers.
• Develop estate and succession plans to transfer ownership interests efficiently while reducing tax burdens.

Private Equity (PE) Investments

PE involves investment firms that provide capital to businesses in exchange for equity ownership. These firms try to enhance the business’s value before exiting through a sale or public offering.

PE investments offer substantial capital for large-scale projects like expanding production or entering new markets. They often bring in experienced management teams to streamline operations and drive growth while maintaining a long-term focus on strategic planning and sustainable development.

A well-structured PE investment can open opportunities for growth with a more robust operation that can stand the test of time—meaning, not only a maintained legacy but an expanded one.

Audit and Tax Checklist for PE Investments

• Obtain comprehensive audited financial statements to meet investor and regulatory requirements.
• Collaborate with tax professionals to structure investments considering capital gains, dividends, and carried interest implications.
• Engage transaction advisory services for deal negotiation, valuation, and regulatory compliance.
• Prepare and file complex tax returns, including state and local filings on a timely basis.
• Plan exit strategies with tax efficiency in mind to maximize returns and preserve legacy.

Steps to Shape Your Farm’s Future

Taking deliberate actions can help guide your farm through a smooth transition.

• Define the vision for your farm’s legacy, including any values and community impact you want to preserve.
• Explore local cooperatives, equity sharing arrangements, and private equity firms that align with your goals.
• Engage family members, employees, and community stakeholders in conversations about the farm’s future.
• Develop a transition plan outlining timelines, roles, and responsibilities for the chosen path.
• Maintain open communication with all involved parties throughout the process.
• Periodically review the plan and adjust as needed to reflect changes in circumstances.

General Audit and Tax Preparation Steps

A more generalized checklist that will apply to each of these legacy planning options might include the following steps.

Gather All Financial Records

Examples include:

• Income statements
• Balance sheets
• Cash flow statements
• Tax returns for the past three to five years

Compile Documentation

Examples of documentation include:

• Farm assets
• Equipment
• Land deeds
• Intellectual property or trademarks

Identify Stakeholders and Ownership Interests

Likely stakeholders would include:

• Family members
• Investors
• Co-op member

Other Ongoing Considerations

Note the following list of ongoing considerations to revisit on a regular basis. An advisor can help you customize this checklist to the specific needs of your farm.

• Schedule periodic financial audits or reviews to maintain transparency and trust.
• Conduct annual tax planning sessions to adapt to changes in tax laws and farm operations.
• Monitor compliance with all regulatory requirements relevant to your chosen legacy strategy.
• Maintain clear and open communication with all stakeholders regarding financial and tax matters.
• Update succession and transition plans regularly to reflect changes in family or business circumstances.

We’re Here to Help

If you have question about managing your berry farm legacy, please contact your firm professional.

Additional Resources

• Agribusiness Practice
• Estate, Gift & Trust Individual Tax Planning