"Nearly half of small business owners plan to retire within 10 years," according to a March 2026 Chase survey. Succession planning matters for family farms and local businesses just as much as it does for a large company. In that same survey, 70% have no formal succession plan or are just starting to build one. Only 8% said they're fully prepared to transition ownership, even though 40% plan to retire within the next decade. Sooner or later, every owner hands off land, equipment, and decisions, with a plan or without one. Below, I'll walk through what succession planning is, where a buy-sell agreement fits, and what makes family businesses and farms different.
What is succession planning?
Succession planning is a roadmap for who runs the business next, who owns it, and how the current owner gets paid when stepping away. It answers three questions: who takes over (a child who already runs the daily operation, a longtime foreman, a business partner, or an outside buyer), when it happens (a planned retirement date or an unplanned event such as death or disability), and how the transfer works (a sale, a gift, installment payments, or a buy-sell agreement).
For many owners, the business is also the retirement plan. That's why a succession plan should cover how the owner will be paid after stepping away, not only who gets the keys.
Where does a buy-sell agreement fit?
A buy-sell agreement is a written contract among the owners that spells out what happens to an owner's share when a triggering event occurs (death, disability, divorce, bankruptcy, retirement, or leaving the business). It names who can buy the share and how the price is set, so the family and the remaining owners aren't negotiating in the middle of a crisis.
There are two common structures. In an entity purchase (also called a redemption), the business itself buys the departing owner's share. In a cross-purchase, the remaining owners buy the share directly. Hybrid versions exist, and the tax treatment can differ between them, which is a good reason to involve your CPA and attorney before choosing one.
Funding buy-sell agreements with life insurance is a popular choice, mainly because it guarantees access to funds right when a buyout takes place. Having the correct valuation matters just as much, though: a business valuation set years ago can easily fall out of line with current value, which is why routine reviews of the agreement are worth keeping up with.
What makes family businesses and farms different?
Family adds a layer that a typical business partnership doesn't have. Often one child works the operation every day and wants to continue, while the other children have careers elsewhere (a nurse, a teacher, an engineer) and may still expect a share of what was built.
On a farm, much of the value sits in land and equipment instead of cash, so splitting everything equally can force a sale or leave the farming heir with heavy debt. Fair and equal can be two different things, and the plan should say which approach the family chose and why. A buy-sell agreement can give the heir who stays a structured way to buy out the siblings who leave, on terms everyone has seen in advance.
Keep in mind that Pennsylvania has its own inheritance tax rules, and they can require extra knowledge and planning when a business or farm passes to the next generation. Because tax rules can change, review the current requirements with an attorney or CPA who knows Pennsylvania before finalizing a plan.
Where should I start?
A simple first step is writing down who you'd want to take over, then talking with them and the rest of the family about it. Next, get a current estimate of what the business or farm is worth. From there, an attorney, CPA, and financial advisor can help match a structure to those goals.
This is a simplified overview, and there are more options than the ones covered here that may fit a specific situation even better. That's exactly the kind of detail worth working through in an in-depth conversation. If you'd like a trusted guide through this process, schedule a no-hassle appointment through our website.
This material is for educational purposes only and does not constitute tax, legal, or investment advice. Succession, estate, and tax rules are complex and subject to change. Please consult with a qualified tax professional or legal advisor regarding your specific situation before making financial decisions.
Sources: Chase, Local Snapshot succession survey (May 2026); McEowen, Buy-Sell Agreements, AgManager.info.