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Finding Fairness in Farm Transitions

Farm transitions can be tough. And they’re only tougher when there’s a lack of fairness during the process.

The daughter of BDO’s Jim Snyder (now retired) thinks farm families will be more successful if they view fairness as “helping everyone be successful” rather than merely “being equal”.

I’ve been challenged to create a session on fairness in farm transition, and here’s what kept me up at night: mulling my thoughts and experience on the topic into a practical tool for you!

Here’s what I came up with (best remembered by utilizing this acronym):

FAIR
Financial Transparency, Attitudes, Intent, Roles

When you utilize this tool during a farm transition, it will help keep the process fair, which can ultimately result in a smoother transition.

Financial transparency.

Financial transparency is an essential part of farm transitions.

Parents should not be silent about their desires for the future. They’re encouraged to openly share the farm books, viability, and their personal wealth situation.

Merle Good has coined the term “personal wealth bubble.” It refers to money that parents can draw income from for the 20 years after transition. They can access this money for gifting to heirs, farm, and non-farm business heirs.

Have you sought out a financial planner to create more certainty about your future financial security? Do it.

Debt servicing, gifting, and farm viability also fall under the financial transparency header.

Debt servicing.

Debt servicing is another important part of the financial transparency discussion.

How much can the next generation really afford to service? What parts of the farm assets are you willing to gift, roll over, or have purchased?

If you want to give an equity position to non-farm heirs, you can do that with well-written land rent agreements. Check to see if your successor wants to be in business with his or her siblings.

Looking for more help and information on succession planning? Don’t miss this article.

 

Farm debt servicing

Gifting

Have you ever asked your adult children what they expect?

Money does not equal love in my books, but for many it does.

I’ve seen parents fret about working to give money to less fortunate children in an unrealistic attempt to make all the kids economically equal. This is a foolish goal.

Many young people with great educations and entrepreneurial skills can end up wealthier than their farming parents.

Many of the young adults I have the joy of working with say things like: “Elaine, we just want our parents to have some fun and enjoy the fruit of their labour. We will be okay. We’ll find a way to make it work.” (Yes, I know you’re wishing you could adopt these kids!)

Consider the gifts of vehicles, house down payments and university degrees ($200K) that you and the farm have already facilitated…then ask yourself:

What do you owe your children?

Farm viability.

Do you have a clear picture of how many families the profitability of the farm can support?

Are you having a hard time saying no to the adult child who is seeking to return against the wishes of your current successor(s)?

This is where operating agreements, codes of conduct and shareholder agreements are helpful tools for role expectations.

I’ve written more about evolving farm family roles, including how these roles change during a farm transition. You’ll find that here.

[Tweet “How #farmers can be #FAIR during #farm transition planning with everyone!”]

Attitudes.

Attitudes about money create havoc when your heirs feel that “love equals money.”

You know too many sad stories about families who never speak to each other after the parents die.

What money scripts are you carrying around? Do you have a scarcity mindset or one of abundance?

(Give “The Soul of Money” by Lynne Twist, “Wired for Wealth” by Brad Klontz or “Moolala…why smart people do dumb things with their money” by Bruce Sellery a read.) 

I suspect that many fights are about the high value put on money and land, and a lack of forgiveness or grace to allow parents to make their own choices.

My experience with estates has been interesting when the main goal is to have richness in relationships and not worry about the size of the inheritance, if there even is one.

Attitudes matter on the farm

So, Bruce Sellery’s penetrating question is, “What does money mean to you?”

Spend some time over coffee talking about it with your spouse and your adult heirs.

What we believe, our values, and cherished beliefs will drive our behaviour. 

If someone is secretive about their plans to be fair, think about open-ended questions that you can draw them out with.

“What does fairness look like to you?” 

Listen carefully to their concerns.

Many folks have been “burned” by their family of origin experiences, and there is usually some history or a back-story that is driving their decision making.

Ask, “How did you get the farm from your family?”

Be curious about women who maybe did not get much compared to their siblings.

Intent.

Intent is another key tool for conflict resolution with farm transitions.

As mediators and conflict resolution communicators, we work hard to find out what each person’s intent is, as well as what they truly desire.

In the case of farm transitions, there are many players with various needs: the founders, the successors, the non-farm heirs, sibling groups, in-laws, and extended family or grandparents.

As you can see, there are a lot of players to consider in the family dynamic web.

Work hard to be clear on your intent, and then listen for what effect that has on the other party.

In my case, I was clear with my parents that I did not expect a large sum of money from their estates, as they needed their finances to focus on the farm’s financial success.

My intent was to have their love, as well as time for my family—as much as they were able to give while they were alive. We spoke about this openly at a family meeting facilitated at their accountant’s boardroom.

My mother died a short 6 weeks later.

farming father and son

If parents don’t agree on their intentions for the fair distribution of assets or gifts, or they fight about what fairness is, then the task is to work with the founder’s vision first.

Roles.

Role expectations about what a good day on the farm looks like for dad and mom, and when the successor can be the main manager with control, are also fairness discussions.

Is it fair for an eighty-year-old to still hold the majority of ownership and control? Is it fair for his sixty-year-old child not to have power? Or the grandparent’s 35-year-old employee/grand-child to not have a concrete equity position?

What do you want your legacy to be? Start figuring out what fairness in farm transition looks like to you. Then act!

Would you like more help securing your farming relationships and handling farm transitions? Contact me today to learn about my farm succession planning and farm family coaching!

If you enjoyed this article  and you’d like to dive deeper, don’t miss these posts:

The 5 Ways of Dealing With Conflict on the Farm
How to Communicate To the Different Generations on the Farm
10 Things Millenial Farmers Want

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“A joy to work with, heard loud and clear. When the farmers laughed or asked a great question, I knew they were listening and really wanted to learn from her. Her tips were easy to understand. It was just about understanding that conflict happens, and to have the confidence in yourself to ask for what you want. In the glowing review from farmers after her presentation, I knew they had heard that loud and clear.”
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“I wanted to say a HUGE thank you for your virtual kitchen table chat with Arlan Academy. My wife and I signed up as it was exceptionally relevant to our current journey with potentially transitioning to her parents’ farm. The session was able to cover so many aspects of these crucial conversations and hearing you speak to both sides of the conversation was eye opening for my own perspective on this topic. It seemed to be very well attended and sounded like there were many other people who would echo my thoughts and feelings on it.”
N. Oakley, Farmer, Ontario
“Elaine helped me allocate $1 Million of assets the night I listened to her. Elaine’s presentation brings value to the use of my services in my office.”
Don Forbes, Forbes Wealth Management
“I recently joined in and listened to your Healthy Farmer Agriwebinar for FMC. I truly enjoyed hearing your perspective and even went and grabbed my Mom, away from her work, to come and listen in on some of your main points as well! One area that really stood out for me, both personally with our own succession plans and with our clients, was your discussion involving "Instant Influence" and how ready are you to change? I loved this concept!”
Annessa Good, FCC Transition Specialist, Alberta
“Elaine Froese truly is the Farm Whisperer. With her big heart and stern resolve, she guides families through uncharted waters and helps them arrive safely at their desired destination. She has been there, done that, and has helped hundreds of families come out on the other side. With your family and your farm legacy on the line, you owe it to yourself to start this conversation. You do not need to do it alone. Let Elaine Froese guide you through. Your legacy is being written day by day. How will you be remembered?”
Tracy Brunet, Host of The Impact Farming Show & CEO of Farm Marketer
“You speak like you’ve been sitting at our kitchen table! You know our family issues well. I am feeling more comfortable understanding what we now need to do. Elaine Froese is real.”
Audience Member,
“I attended the meeting you spoke at in Stratford Ontario recently. We held an emergency family/farm meeting today because of issues that I had enough of. We used a 'talking stick' like you recommended and wrote a chart of rules. The rest of the family thought the idea that we needed a meeting was worth rolling their eyes over, until we got started. The younger ones were quick to clue in that they now have an opportunity to be bluntly honest. The older ones took a bit longer to believe they could truly say what they think. In the end, the meeting needed two sessions because there was so much to talk about… and so many things people didn't realize were a big deal to the others. Your lessons and encouragement have given us the tools we need to get to a better place in our relationships and our business. Truly thankful.”
Kim Martin, Dairy Farmer, Ontario
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Tennille Wakefield, Farm Partner
“Some great lessons, Elaine! You continue to do some remarkable and potentially life-changing work.”
James Mitchell, Principal, Conversations Consulting
“Our family had a good farm meeting yesterday afternoon. Your Fairness video was a great topic of discussion. One of the action items after the meeting was to have my two non-farming siblings watch the video before the next big meeting they are involved with on the farm. It will be a great conversation starter as we catch them up on our current plan. As they are younger, we also hope it will help them to ask new questions that may not have been on their mind.”
G.G., Farm Family Legacy Coach, Alberta
“Elaine gives me excellent tools that help me work with my clients!”
Laurianne Osmack, Financial Planner / Partner, Doell Osmak Wealth Management
“She has a sense of “knowing” quickly what is happening in the family dynamic. Her messages to her audiences drive home what needs to be done next to solve the complex issues of farm transition and conflict resolution.”
Audience Member,
“Eye-opening. Excited to open the door of communication with my spouse and farm family.”
Ashley Hoppe, Farm Partner
“The Strong Farms, Strong Families session gave farm families an opportunity to meet face to face with Elaine Froese... hear her own story, experiences and skill set. From this information packed session and related materials, families could identify areas of success in their journey and other places they need assistance. The greatest take away was that participants could see that Elaine Froese is someone they can trust with the things that they hold most precious.... their family and their farm.”
Nancy Atkinson, Nobleford Ag Society, Alberta
“Elaine’s real-life scenarios help her audiences know they are not alone, knowing there are creative solutions to help them get the life on the farm they have always wanted.”
Audience Member,
“A long time female client who had refined the art of procrastination was so moved by the end of your presentation that she accepted your permission to “drop the bananas.” She contacted me soon after for an appointment to do some planning which included the selling of the family “Century Farm.” A very, very emotional decision on her part that was not likely to have occurred without your presentation.”
Don Forbes, Forbes Wealthy Management
“I just have to say… that your work is amazing and I have never forgotten your teachings from our session in Williams Lake at TRU. It is super important work. I know so many people going through the trauma of succession. I hate to use that word, but I was an “out-law” and know it can get terrible. I continue to forward your emails on to others. Keep doing what you do! You are amazing. You kind of walk into the fire regularly… and with a smile. Proud to have met you.”
Megan, BC Rancher
“As my husband and I eagerly started the course we were optimistic and excited to be taking this next step in our Farm Transition. We were starting to question ourselves and whether or not we were just being selfish and greedy, and if this Farm Transition was still an option for us. We barely got through the first Module and were already having such a huge relief. As we moved through the modulus there were so many times that we just sat back with our hands in the air and thought YES. My husband and I would smile with relief because all of the concerns that we have been struggling with were relevant and came up in the modules. We really enjoyed the course and are excited to move on to the next stages to find our farm resolution.”
Shannon Gilchrist, “Get Farm Transition Unstuck” online course participant
“My hubby farms with 2 brothers and parents, and it’s become a really toxic place. No communication, no respect, etc. Twelve months ago, my husband’s brothers told him they don’t want to work with him anymore and offered him a pay out. His parents did nothing to stop it! He had no choice but to leave. Three months later, we moved off the farm and into town. He has been offered heaps of jobs and is now truck driving and carting hay and grain. We have tried communicating with his parents about what happened but they are not interested. So basically my hubby has lost his family. Very sad but we as husband and wife are overall in a good place and moving on to create our own life. Please continue on with all your wonderful work in helping families on the farm. I continue to tell any farmers I know about you, that they must ‘google’ you, and read your books.”
Donna, Farmer, Australia

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