Wishing everyone a blessed Thanksgiving with family and friends! We have much for which to be thankful!
Last week we held a farm transition meeting in York. I was thinking back to a family gathering we had shortly after one of my dad’s farm accidents. We were grateful he was going to be ok. In talking about what needed to be done on the farm, I asked something like, “Does anyone here know what your wishes or plan is for the farm if this had been more serious?” It wasn’t the best time and I didn’t do this correctly. It did allow for discussion as we never talked about what would happen to the farm before that. I’m grateful my parents responded over time asking each of us kids our intentions/values regarding the farm. They then put their estate plan together and at Christmas one year, went through everything with everyone including any spouses that were present. What I appreciate the most is that they were intentional and there is no secret.
The fact that estate plans can be secret was a common frustration among attendees at the workshop…and as I talk with various farmers. Dave Goeller, emeritus Farm Transition Specialist, shared a sad story about a man in his late 60’s whose 90+ year old dad still hadn’t transitioned management of the ranch to him. When he asked his dad about the opportunity to manage the ranch in the future, the dad didn’t wish to talk and said not to worry. I won’t go into the details but when the parents passed away, the ranch was sold. What’s sad is that, most likely, the outcome is not what the parents intended, and certainly not what the son hoped. We need to get away from estate plans being a secret.
Consider these questions:
- Have you been able to talk to your parents about what is happening with their estate plans? If not, why?
- What is your biggest concern/anxiety/fear(s)? What are you afraid you might find out?
- What is the biggest obstacle in your family dynamics?
- What do you love about your family business?
- What is the worst situation you can think of which might happen in the future?
- What could you learn that can help you?
- What is your mission statement for your farm/ranch? What is your vision for the farm/ranch?
- What are your goals for your farm/ranch? What will you do to make your vision happen?
Dave shared that while a person may feel like a ‘vulture’ when asking about the estate plan (as asking can come across as greed), it can really be a question over shared values. As I think about my immediate family, our shared values are faith, family, hard work, sacrifice, maintaining our family farm. I should’ve broached the subject using shared values instead:
“Dad, I’m so grateful God protected you and you’re going to be ok! You and mom have worked so hard and sacrificed so much for us kids and for this farm. We as your children wish to see your legacy live on in keeping the farm in our family. May we please discuss what your and mom’s goals and dreams are for the farm in the future?”
For those who have asked me how to have this conversation, perhaps some of these questions found in the Workbook at http://go.unl.edu/FarmRanchTransition may help? I also have copies of this workbook in the Extension Office. The questions cover a range of topics from understanding common values, asking if there are written documents, what is long term health care plan to protect the farm/ranch, contribution of all heirs, etc. Please also consider the Nebraska Farm Hotline at 800-464-0258 as a valuable and free resource for you! This hotline is a confidential resource for talking about stress, anxiety, financial concerns, and also for scheduling a time to meet with Dave Goeller and Joe Hawbaker (Attorney) for free to discuss estate plans and farm transitions. All you need to do is call 800-464-0258. For those interested in meeting regarding estate plans/farm transition, Dave and Joe have promised to come back to York to meet individually with families once they receive at least 5 calls. So, if this is of interest to you, please mention this when you call the hotline.
Final thought, this past year in particular, several farmers have shared with me their children would like to see them retire. I sense a variety of feelings about that from them as I listened. I also asked several questions including, “What does retirement look like to them? What does it look like to you?” Perhaps those and other questions could be asked in an honest conversation together?
Much of our identity, right or wrong, is found in what we do for a living. After all, we tend to ask this question when we meet new people. Through life’s circumstances, I’ve had to learn to seek my identity in who I am. Dave mentioned to think of retirement not as no longer working on the farm or being an important player, but retiring the management to the next generation. So, perhaps work out a transition plan that fits your situation where the first perhaps 3-10 years, the older generation is the primary manager in a mentor role explaining why he/she made the decisions a certain way to the next generation. The next 3-10 years, decision making is shared between the older and next generation. After that, decision making is transitioned to the next generation. And, during this entire process, the older generation needs to consider what he/she will be “retiring to”…what purpose or meaning can be found to occupy the time that was once spent in managing the farm?
Ultimately, estate planning and farm transition…relationships…are too important to not talk about these topics. Let’s no longer keep them a big secret!
I would encourage any farmers, spouses, and adult children to consider attending this Farmers and Ranchers Program! Communication and fair transition plans are keys to keeping family ties and the family farm strong. I’ve watched too often where communication doesn’t occur-even most recently with my extended family-and the heartache caused as a result. Work on the communication and transition plan now before it’s too late!
The final Farmers & Ranchers College program for the 2012-13 programming year will be held on March 14, 2013 starting at 6:00 p.m. with a meal and the program to follow. It will be held at Evening with Friends Restaurant in Milligan and will feature Dr. Ron Hanson, Neal E. Harlan Professor of Agribusiness, Ag Economics Dept., UNL. A description of Hanson’s program is provided below.
The entire process for mapping out a succession plan to transfer the eventual ownership of a family farm from one generation (parents) to the next generation (their adult children) can be an overwhelming task for many families. Where does this process even begin? Who makes the final decisions? Can you be fair to everyone involved? What if there is not good communications within the family? How do you keep emotions and personal jealousies from taking over and preventing good decision making? These…
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Last week I attended the Women in Ag Conference in Kearney. It’s always a great conference to see many friends and meet new ones who live and work in agriculture! I also enjoyed teaching a very engaged group of women the second day about crop science investigation. It was fun for me to see them dig into the hands-on activities!
The first session I attended was by Dave Specht from the UNL Ag Economics Dept. He does a great job of relating to the audience and talked about “Woman’s Influence-the Key to Generational Business Transitions”. Dave has a consulting business on the side and as part of that business he meets with families to develop a farm transitional plan based on the Continuity Quotient he developed. The Quotient contains 7 parts and I’ll share some key highlights via questions he raised that stuck out to me. Perhaps they’ll raise more questions for you as well.
1-Business/Estate Planning: The goal of the business/estate plan is to reduce the number of surprises to the farm and family members upon death of the farm owner. Is your plan coordinated with all the advisers in the operation and does it consider the perspectives of all the generations involved in the operation? Is it even documented and has it been communicated to the entire family before the owner passes away?
2-Communication: Are family members able to openly discuss the farm and what it means to them?
3-Leadership Development: No one is ever “ready to take ownership”; it is learned along the way. Opportunities for the next generation to make decisions need to be allowed. Often we hear of exit plans, but is there an “entrance plan”-a strategy to invite the next generation back to the farm?
4-I didn’t catch the name of this point but essentially Dave was saying that if the next generation is always asking his/her parents for a bailout, that it delays the trust that the person can someday operate the farm. How the next generation handles personal finances is important in showing he/she can someday run the operation.
5-Personal Resilience: How does the next generation handle challenges? Does the person retreat and avoid them or does the person look for ways to overcome them and use it as a growing experience? If the person retreats, he/she may not be wired for ownership in the future.
6-Retirement/Investment Planning: When will the older generation plan to retire? How much will the farm support (meaning how many people)? Where will retirement cash flow come from? The goal is to not rely on the next generation to generate your entire retirement income.
7-Key non-family employees: Sometimes the most valuable family business asset goes by a different name! Is the vision for the family farm communicated to these employees? How you talk about employees to next generation and how you talk to next generation about the employees is important in dictating future partnerships; someday the employees and next generation will be partners.
I would recommend checking out Dave’s Web site at http://www.davespecht.com for more information. He provides communication and consultation about farm transition and financial planning. Life is so short! Make sure you have a plan in place that follows the keys Dave provided above!