“Fair vs. Equal”

By now it’s clear that what we have here is a building block process.

We started without fanfare, looking for what’s important. What’s worth working hard for, what’s worth fighting for?

Next we looked at a key stumbling block (there are several aren’t there) that results when no one is in charge of pushing the others along, keeping everyone focused.

I hope the session about how to create a scope of work, the formal name for an important process, was clear. There’s a lot of information in much greater detail available via a Google search. It will systematize the gathering and sorting of important facts and feelings.

That led us inexorably to what we covered last week, the importance of solving the concerns of the senior generation so they’ll loosen up a bit and consider more openly a range of possible ideas for securing their situation so they’ll feel more comfortable turning over the reins – even if that’s little by little, to the next generation.

Fair vs. Equal

Succession is primarily concerned with “transfer.” It involves the movement of assets, ownership, influence, authority, and responsibility.

Each of these is powerfully important in the hearts and minds of the people involved, so transfer is not a simple thing.

If the final plan isn’t able to make the transfer and transition as right as possible from everybody’s point of view, it either will not happen (because somebody will drag their feet) or the outcome will be flawed from the beginning.

Such flaws almost always result in pulling people and the farm apart.

Let’s assume that you’ve had the earlier discussions – or maybe they were not required, in order for you to know with certainty who is going to be your next generation on the farm and who has chosen not to.

That being the case it’s time to come face to face with the following questions:

• How can we design our farm succession so that it will be as fair as possible to everybody?
• How can we, in the process of being fair, treat everybody equally?
• How can we make sure that, Once succession is accomplished, the senior generation has financial security and an acceptable life after succession? Something we began thinking about in the previous session.

While these questions are straightforward and simple enough, they raise some potentially troublesome problems and may generate some stormy discussions.

After all, what is “fair” anyway? Is it some kind of objective cast in stone truth, or does it’s definition depend on the person defining it?

Most of us know the answer to that question right off the bat.

And is “equality” necessarily fair? Do we instead have to consider factors of differing needs, differing commitment, and differing rights?

Finally, what do you mean by the words security and acceptable?

Legacy vs Opportunity

I know your situation is unique and more complicated than the example I am using here. Even so it may provide a basis for thought and discussion with your family and later with your advisors.

The folks who are committed to the farm’s future, we’ll call them the “successors”, are being provided with an opportunity – a way of life, a business to own someday, and if they are able to grow it they’ll see a return on their commitment in dollars and cents.

They also have the “opportunity” to provide for the security of the senior generation and perhaps buy that part of the operation that is not left to them in their parents will or by some other contract.

Doesn’t it make sense that everything possible is done to make this difficult task as easy as possible?

Those who have chosen not to be farmers, people who chose not to share the risks and responsibilities of running the place in the next generation, let’s call them the “heirs” – individuals who deserve to receive an inheritance for no other reason that they are the children of the senior generation.

Wouldn’t it be better if they received that legacy sooner rather than later?

Most of us non-farm heirs receive our inheritance late in life, maybe after our kids are out of college, and after the worst thing we can imagine has happened – our parents have died.

Wouldn’t it have been better if we’d received, perhaps a lot less, when we were trying to buy a new home, send our kids to camp, or to the college of their first choice?

Not only is this better and less of a financial strain on the senior generation (and the successors) it provides needed resources while the people providing them are around to get a few extra hugs and kisses.

Distribution Objectives

In my experience I have found that failing to address the issues of fairness and equality is often the critical stumbling block to succession planning.

Creative technical solutions are available to even the most difficult problems, and those solutions are up to your professional advisors to create.

However, even the most competent professionals can’t define what is “fair” and what comprises “equal.”

This you must do yourselves – together as a family, as a team committed to one another and the future.

There will be multiple concerns and different objectives, but there can only be one integrated plan.

So you need to come to it, together.

All the best!

Wayne Messick,