Gift Something Lasting: Passing Down a Family Farm or Business at Christmas

The holiday season often brings crowded stores, rushed purchases, and gifts that rarely last beyond the year. Families who own a farm or small business have another option. Instead of buying something temporary, consider using the season to give your adult child a stake in the family business. This type of gift secures your legacy, honors their involvement, and creates a tradition that carries meaning long after the decorations are put away.

Family Farms and Generational Ownership

Family farms remain the foundation of American agriculture. According to the most recent Census of Agriculture, about 95 percent of U.S. farms are family owned, and small family farms make up 85 percent of that group. Even so, the number of farms successfully passed down to the next generation continues to shrink. Many operations are lost because transitions are not planned early enough, leaving families to settle ownership through conflict or forced sales. Beginning the transfer during your lifetime, even in small portions, makes the process smoother and keeps the farm in family hands.

Tax Rules That Make Gifting Possible

Federal law allows you to transfer substantial wealth during your life or at death without incurring estate or gift tax. In 2025, the lifetime exemption is $13.99 million per person, or $27.98 million for married couples and in 2026 they will increase to $15 million per person or $30 million for married couples. These figures indicate that very few family businesses in Pennsylvania will ever be subject to federal estate and gift taxes.

There is also an annual exclusion that allows you to gift up to $19,000 per person in 2025 without using any of your lifetime exemption. A married couple can give $38,000 to each child or $76,000 to a child and their spouse in the same year. These figures will stay the same for 2026. This flexibility allows families to transfer ownership gradually while staying within tax limits.

Steps Involved in Transferring Ownership

Transferring ownership of a farm or small business is more than handing over paperwork. Each step protects both you and your child while ensuring the process is legally sound.

• Obtain a professional appraisal to determine fair market value.
• Review or create a business entity so ownership shares are clear.
• Prepare the necessary legal documents, such as deeds or transfer agreements.
• File a gift tax return if the amount exceeds the annual exclusion.

Taking the time to handle each step now can save arguments later and help both you and your children feel secure about the transfer.

Building Confidence Across Generations

Passing down a farm or business is more than a financial transfer. It is also about preparing your children to lead with confidence. When ownership shifts gradually, parents can stay involved long enough to answer questions, offer advice, and share lessons that do not appear on paper. This hands-on approach reduces stress when the full transfer eventually occurs. National studies show that only about 30 percent of family farms survive into the second generation, and fewer than 15 percent make it to the third. By starting early, you increase the odds that your family’s work continues well into the future.

Call Hazen Law Group

If you are ready to explore giving your child an ownership interest in your farm or business this holiday season, call Hazen Law Group in Harrisburg at (717) 540-4332. Our attorneys can help ensure your legacy is passed on successfully to the next generation.