Farmers often stop me in the hall of conferences to ask deeper questions that are keeping them awake at night. The most common question is “Elaine, how do we even get people to the table to talk about the farm legacy? My parents are refusing to talk, and my grandparents are even more stubborn!”
Farm families are stuck because they give in to procrastination and fear of conflict. If you want something really badly, how persistent are you willing to be to get the answers to your “burning questions?” Love does not read minds. Your farm legacy will not happen unless you commit to act, get clarity of expectations for each generation, and set accountable timelines. Everyone MUST do the work of talking.
So let’s dig in with practical approaches.
1. What Do You Want?
Name your income stream for the next 20 to 30 years as founders, and as young parents. What do you need (not want) for family living expenses? The dollar data is important for all generations. Grandparents may be holding tight to gold, cash, and land because they survived the depression and have money “security” issues, or power and control issues. Do you know what it cost you to live in 2016? Check your bank statements.
2. Where Are You Going to Live?
If founder Dad can’t give up access to the shop and Mom wants to be off the main yard (Grand Central Station of activity) then you have a spousal fight on your hands. Each couple needs to be clear about where and why they want to live at a certain spot. If a new house needs to be built for under $300K, who is paying for that? Notice I gave you a budget for the house because farm homes don’t make money.
3. How Are You Going to Service Debt?
The founders don’t want to burden the next gen with crazy debt. Merle Good’s presentation at Farm Tech talked about creative equity sharing with corporations so that the parents have cash flow and shareholder loans. Most founders I meet don’t expect their business heirs to buy the whole farm (they can’t afford to) but do expect some debt leveraging. It also helps if founders have the “personal wealth bubble “ beyond the farm assets to draw income from and gift to non-biz heirs. So, what level of debt are you willing to service? Have you been to your lender of choice as a young farmer to see what you can manage?
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4. What Will Your Roles be as the Farm Grows?
How big is big enough? Does granddad want a position as wise elder, and can he transfer assets with a warm hand rather than a cold one? Does grandma want a life estate in her house, and then move to more care in a senior’s home when she needs it? Does dad want to become the hired man again? Does mom want to travel with a girlfriend? (Dad loves to farm, not much travel for him!) Does the daughter-in-law or son-in-law have a voice in the transition plan at the beginning stages? Who is going to take over the financial role of book-keeping? Who is the ultimate decision maker for management? What are the strengths and weaknesses of each farm team player? Roles and responsibilities change as we age, so pay attention to the spoken expectations of your farm team. Remember, job descriptions, performance appraisals worked on the oil patch, and now those same skills need to be transferred to your farm to be more professional and aware.
5. What do We Tell the Non-Farm Heirs to Help Them Understand That They Aren’t Getting a Raw Deal?
I don’t make these questions up, these are real questions folks ask me as a coach. The fairness issue is about how the estate will be handled, and what legacy opportunities the farm succession or business continuance plan will give the non-business heirs. What do you owe your children? What support is, or has the farm cash already given to the family? Is there greed and entitlement issues that need to be talked about openly? A college education is worth $200K if it was paid for by parents.
6. How Do We Protect Our Hard Earned Wealth From Spousal Breakup?
Do you have separate farm corporations that partner? Divorce fear keeps people in the dark for decades. I have seen this happen where the parents don’t transfer assets until they see what happens for the first 25 years, and even then there is no guarantee that the marriage will last. My encouragement is to have a culture of love and respect for all family couples and let everyone voice their farm vision. Non-farm kids can also add insight and great wisdom to the planning conversations. See my blogs on divorce.
7. Download the Farm Family Toolkit
You need to have a toolbox to work from. If you start here, you’ll have my coaching on paper to start getting organized to have more robust conversations. You have to talk and listen respectfully to each other. The talking is the work. A recent client relayed to me that her lawyer was impressed by how many issues were clear to the family BEFORE the lawyer visit, so much so that the family saved hundreds of dollars in fees because they came to their advisor table prepared.
8. Talk to Yourself About All of the Points Above
Get clear on what your needs, wants, and expectations for transition and legacy are. “I think, I feel, I need, I want …” is a good script. Then date your spouse and talk with them. It helps if couples are aligned with what they value and envision for the next chapter of their lives. Then set a date for a family transition exploration meeting. Neutral zones like boardrooms at the accountant or a hotel work well unless the family home is workable. Bring your flipchart, a talking stick, post-it notes, and your best character. Hire a facilitator if you want to ensure the dialogue is kept safe and respectful. Hire a babysitter to care for kids off-site. Meet for 3 hours with the first 2 hours to explore the issues, and the last hour to craft a “next steps” list. Photograph the flipchart notes with your smartphones. Email the action list to everyone, and set target dates for completion of all the action items. Set a date for the next meeting. $50 fine to those who cancel. Families who meet regularly are 21% more profitable, so get going!
9. Build a Binder to Organize All of the Vital Plans
The action list, accounting /tax, wills/estate, lifestyle plan (income streams, financial plan), insurance, business plan (vision for the farm), etc. This planning binder will be your “go to” document holder as you build your team of advisors and have more meetings to get clarity.
For our 1992 succession, this took 6 months and only 3 meetings. For our 2017 succession, we’ve had 1 meeting with our coach so far, and we are moving off the main yard in 2020. Ravage my website for more help tools. Also, I want to hear your success stories, so please feel free to get in contact with me!