The Illinois Farmer’s Annual Legal Checklist: What to Review Each Season can help farm owners address legal and business issues before they become expensive problems. Farming rarely leaves much time for paperwork, but contracts, leases, insurance policies, employment records, succession plans, and business filings should not be ignored until a dispute or emergency occurs. Dividing these reviews by season can make annual legal planning more manageable.
Winter: Review the Farm’s Business Foundation
Winter is often the best time to step back and review how the farm business is structured. Begin by examining the farm’s partnership agreement, LLC operating agreement, shareholder agreement, or other governing documents.
Consider whether the agreement still reflects:
- Current ownership percentages
- Each owner’s management responsibilities
- Voting and decision-making procedures
- Rules for withdrawing from the business
- Buyout procedures following death, disability, divorce, or retirement
- Methods for valuing an owner’s interest
- Plans for admitting the next generation
A farm may operate for years based largely on trust and habit. However, ownership changes, marriages, divorces, deaths, and disagreements can expose weaknesses in an outdated agreement.
Farm entities should also confirm that required annual reports have been filed and that the business remains in good standing. Illinois LLCs must file annual reports, and failure to file and pay the required fee can result in delinquency and, eventually, administrative dissolution.
Winter is also a good time to review tax and employment records. Agricultural employers may need to file IRS Form 943 if they paid wages to one or more farmworkers and those wages were subject to federal income tax withholding or Social Security and Medicare taxes. Form 943 is generally due by January 31 following the year in which the wages were paid, although a later filing date may apply when all required deposits were timely made.
Spring: Review Leases, Labor, and Production Agreements
Before planting begins, review every agreement affecting land, labor, machinery, and production. Do not assume that an arrangement is clear merely because the same people have followed it for several years.
Written farmland leases should identify the acreage, rent or crop-share arrangement, payment dates, property-maintenance responsibilities, permitted uses, insurance obligations, and renewal or termination procedures.
Illinois has specific rules governing the termination of certain year-to-year farmland tenancies. In general, written notice must be provided at least four months before the end of the year of letting, and that notice requirement cannot be waived through a verbal lease. A written lease may contain additional provisions that must also be reviewed.
Spring is also the time to review:
- Custom farming agreements
- Equipment leases and sharing arrangements
- Seed, fertilizer, chemical, and feed contracts
- Livestock grazing or boarding agreements
- Easements, drainage rights, and access agreements
- Seasonal employee documentation
- Independent-contractor classifications
The label placed on a worker does not necessarily determine whether the person is legally an employee or an independent contractor. Farmers should review who controls the work, how the worker is paid, who provides equipment, and whether the arrangement accurately reflects how the parties operate.
Summer: Confirm Reporting, Safety, and Agri-tourism Practices
Once planting is complete, farmers should confirm that required crop acreage reports have been submitted. Acreage reporting deadlines vary by crop, state, and county, although July 15 is a major deadline for many crops. Producers should verify their specific deadlines with their local Farm Service Agency office and crop-insurance agent rather than assuming that one date applies to every operation.
Farm records should accurately identify planted acreage, prevented planting, failed acreage, land use, and the producer’s interest in the crop. These reports may affect eligibility for crop-insurance benefits, disaster assistance, and other USDA programs.
Summer is also a practical time to conduct a farm-safety review as a best practice. These steps are not necessarily separate legal requirements, but they can help reduce risk, support insurance and employment practices, and create a clearer record if an incident occurs. Farmers may wish to review machinery procedures, chemical handling, employee training, livestock areas, grain facilities, vehicle use, and emergency plans.
Farms offering U-pick activities, tours, farm dinners, animal encounters, educational events, or other agritourism experiences should separately review:
- General liability insurance
- Visitor entrances and parking
- Warning signs
- Waivers and participant documents
- Vendor agreements
- Food-service requirements
- Procedures for children and animals
- Emergency-response plans
Illinois law provides certain liability protections for qualifying agritourism operators involving inherent risks, but the law requires a prescribed warning notice to be posted as required. Liability protection is not a substitute for appropriate insurance and reasonable safety practices.
Fall: Review Harvest Contracts and Next Year’s Plans
As harvest begins, review grain marketing, storage, hauling, and delivery contracts. Confirm pricing terms, quality standards, delivery deadlines, storage charges, rejection procedures, and responsibility for loss.
Farmers should document machinery purchases, sales, trades, loans, and major repairs. Titles, invoices, financing statements, warranties, and insurance records should be stored where they can be located quickly.
Fall is also an appropriate time to address farmland leases for the next production year. Questions about acreage, rent, improvements, drainage, hunting rights, conservation practices, or responsibility for repairs should be resolved in writing before the next season begins.
Finally, schedule a family or ownership meeting. Discuss what went well, what caused conflict, and whether the next year may bring changes in ownership, management, labor, or land use.
Make Succession Planning an Annual Conversation
Farm succession planning should not be treated as a single document that is signed and forgotten. Each year, farm families should ask:
- Who can make decisions if the primary operator becomes incapacitated?
- Who is authorized to access business accounts and records?
- Does the operating agreement match the owner’s will or trust?
- Are life insurance and beneficiary designations current?
- Does the next generation want to operate the farm?
- How will farming and non-farming heirs be treated?
- Is there enough liquidity to pay debts, taxes, or a required buyout?
A succession plan may need to coordinate estate-planning documents, business agreements, land ownership, insurance, and management authority. Reviewing only the will may leave major gaps in the plan.
Frequently Asked Questions
How often should a farm operating agreement be reviewed?
A farm operating or partnership agreement should be reviewed at least annually and whenever there is a major change in ownership, management, family circumstances, financing, or business operations.
Should a verbal farmland lease be put in writing?
Yes. A written agreement can clarify rent, acreage, renewal terms, maintenance duties, improvements, insurance, and termination procedures. It can also reduce disagreements about what the parties originally intended.
Does every farm need an LLC?
No. The appropriate structure depends on the farm’s ownership, liability risks, tax considerations, succession goals, and operations. Forming an LLC without maintaining separate finances, accurate records, and proper agreements may not provide the protection the owners expect.
When should a farmer begin succession planning?
Succession planning should begin well before retirement. An unexpected illness, injury, death, divorce, or dispute can interrupt the operation at any age. Beginning early also gives family members time to discuss expectations and prepare the next generation.
Schedule an Annual Farm Legal Review
An annual legal review does not need to happen all at once. Addressing business documents in winter, leases in spring, reporting and safety best practices in summer, and contracts and succession planning in fall can make the process more practical.
Rincker Law, PLLC assists Illinois farmers with agricultural contracts, farm-business planning, land matters, succession planning, and related legal concerns. To schedule a consultation, contact Rincker Law, PLLC at (217) 774-1373.
Legal Disclaimer
This blog article is provided for general informational purposes only and does not constitute legal advice or create an attorney-client relationship. Legal requirements vary according to the facts and may change, so farmers should consult qualified legal and financial professionals regarding their specific operations.