At the 2017 Ag Summit, keynote speaker Dr. Ron Hanson presented on the topic of farm succession planning. Since the event, many attendees have reached out wanting more on this topic. Dr. Hanson was kind enough to share his top five takeaways about farm succession planning. We hope this is a starting point for everyone to take the first steps in their succession planning.
Putting together a farm succession plan for the next family farming generation can appear to be an overwhelming task. Succession planning often brings with it many challenges as well as emotional issues, which eventually need to be resolved between family members. Most farm families realize the importance as well as the need for a succession plan in order for their farming legacy to continue, but very few families have accomplished this goal or have a succession plan in place. Parents must have a vision for the future of their farm as well as the handling of their final estate. Then Mom and Dad must discuss their intentions with their adult children so there are no misunderstandings as well as avoid any potential sibling conflicts that might happen later. This is a starting point for a well-designed succession plan which is required to ensure the future success for the next farming generation. The ultimate goal is to keep the farm in the family as well as keep the family on the farm for a farming legacy to continue and prosper.
- Family members must sit down together and talk about the “what if family issues” that might happen within the farming operation. This takes a family out of their comfort zone and forces them to work through the personal fears and anxieties that are involved with succession planning. If something happened today to the farm or the family, does everyone already understand what happens tomorrow? Always expect the unexpected when planning. Things often happen in family farming situations when you least expect it. So be prepared with a plan.
- Parents must strive to treat all their adult children in the family in a fair and equitable manner when passing on their farm estate. Recognizing and rewarding sweat equity by the farming children is important. Also, consider the adult children really care the most about the family farm as well as the well-being of the parents in their final years of life. This will help to avoid potential sibling jealousies within the family, which can later lead to family disputes when settling the parents’ estate upon their death.
- Never underestimate the power of open and honest communication, which builds trust, as well as respect between family members. Succession planning requires the ability of all family members to communicate and share their true feelings with each other. Secrets as well as hidden feelings only cause distrust within a family and quickly invites personal conflicts between family members. A strong line of communication between family members fosters family harmony and promotes the success of a farming legacy.
- Always remember that it is never too early for a farm family to begin their farm succession planning process. The mistake is waiting until it might already be too late to put a plan in place. During the time of a family member’s death and/or a farming crisis is not the best time to be making decisions in an objective manner. Planning deadlines must be established so that goals are accomplished and carried out. Put together a succession planning team (your accountant, attorney, farm lender and estate planner) to work with the family to get their plan achieved for the next farming generation.
- The key to success is making the commitment to begin this succession planning process and then follow through until a plan has been put in place and communicated with each and every family member. Succession planning can be a long and strenuous journey with many potential issues to discuss and work through. There are no shortcuts and/or easy solutions to all of this. However, accomplishing this task will bring peace of mind to the entire family as well as ensure an easy transition of ownership and management control to the next generation taking over the family farm.
To receive more information about Dr. Ron Hanson’s presentation at the 2017 Ag Summit, please email firstname.lastname@example.org.
If you are part of a farm family and wondering what you’re risking by not putting together a succession plan, contact TS Prosperity Group today at 844-487-3115.