As the farming population of boomers ages, so does the over eighty crowd. These aging patriarchs and matriarchs are still ruling farms, some with a heavy hand. This is not a happy situation for the twenty-something grandchildren who are dreaming of establishing their farming careers after college. It is also the cause of many sleepless nights and marital strife for the couple caught in the middle between a stubborn farming father, and growing adult children who want to know what “THE PLAN” is.
Let’s define “the plan”.
It is knowing when granddad is going to transfer ownership of assets. The lawyers may have cautioned him about not “ruling from the grave”, but he is keen on tying up his assets for as long as possible and not transferring title to land or moving shares. Is this due to fear of loss of wealth, avoidance of conflict, or just the stubborn price to keep a tight fist of control till death?
Gracious grandparents have ample personal wealth to live out their days on this earth with style and dignity. They are happy to shift ownership of the business with a warm hand, not a cold one. These folks grew up in times of depression and great financial strife, but they are not going to let their “money scripts” tie up the growth and passions of their grandchildren. They also will not be bullied into helping keep all of their own children economically equal because they know that is a foolish approach to fairness.
The plan also involves finances for assisted living or long-term care, should the over 80 parents need that kind of care. Wills are updated, enduring powers of attorney in place, and a healthcare directive is signed and ready to go.
The next piece of the plan is for the “sandwiched” late 50, early sixty couple. For 25 to 30 years now they have scrimped and deferred gratification in order to grow equity outside the grasp of grandpa. They have also created, and expanded Grandad’s wealth by farming his assets, and providing him a handsome income. Only trouble is, they are tired, want a new chapter of life, and are in a quandary as to how to help set up the next generation when they are still stuck with debt and not enough assets they can call their own. Oh, and sometimes there is an unresolved divorce at this age that is causing huge uncertainty. The 50s/60s couple needs a personal financial snapshot. If they are going to stay in their current housing, they just saved $400K that is not needed for a new home in town. If they continue to travel for short periods and live simply enjoying grandchildren, things look pretty sweet. The part of the certainty of the plan that escapes them is the date that they will inherit the grandparent’s assets, and how much of those assets will be going to non-farm siblings. Ouch. Wouldn’t it be nice if the assets were all transferred before death so that each person could get on with their business growth? Or a least have a greater share of farm’s net income going to the folks who are slaving away in the fields and the barn?
Then the plan extends to the grandchildren who are the fresh new labour and energy of the farm. They are future business heirs and partners. They will work much harder when they actually own something and have what is called “skin in the game,” Debt servicing has a way of making the youngest generation pay attention to costs, market returns, and cash flow. They learn to crunch numbers and work smarter, not just harder. They are also marrying at this stage and having babies, which calls for family time. All work and no play is the perfect set-up for early divorce and grumpy people.
So what is my warning?
Stop the procrastination on your farm now. Have a joint meeting with your key advisors and the eighty-year-olds on your farm. You can no longer be a slave to a system that is not fair. Accountants can plan for tax efficiency. Lawyers can draw up new share agreements, wills, and powers of attorney. Financial planners can give the 80-year-olds financial certainty and security with their pensions and personal wealth kept for their needs. Coaches can facilitate the courageous conversations where each generation talks about needs, wants, and the timeline to get things done. Counselors can deal with grief, loss and divorce healing.
Aging parents may suffer from unwise decision making when their minds start to fail, and dementia becomes a reality. Boomers die from heart and stroke disease, cancer, and accidents, which can leave the remaining spouse in a difficult situation if there is no contingency plan to follow except fighting with the in-laws for control of business assets.
The young farmers can’t stand the “pain of not knowing the plan” and being in limbo. They are wired to have action, and to have results.
Wise farm families are always talking, listening, and making adjustment as necessary to the business plan, succession timeline, and the estate concerns. This is not a one-time event, but a journey.
Unfortunately, I have encountered far too many over 80 men and women who are wielding undeserved control over the future of the farm. Please embrace change as a good process, and ask for help in making the changes need to preserve a happy farm family legacy, not a war of words and battle for power and control.
Act your age. It is time to shift your mindset from control of the business, to creating a harmonious legacy.
Life is short. Death is certain. Make a new plan now!