Farm Succession – The 7 Keys to Successfully Passing Down The Farm to The Next Generation
farm succession planning at a soybean association in 1998" align="left" />
As a farmer, what do you think of when the term “farm succession” is mentioned?
Or as it is usually referred to, passing down the farm?
If you are the senior generation on the farm you no doubt consider it differently that your son, daughter, son-in-law, etc.
And I know you think about it differently than your spouse.
One thing is likely to be true of everyone – you see it as an event, like buying a car or something, rather that the process it really is.
A process that should have already started and will never be over.
Do not despair because as the saying goes, “the best time to plant an oak tree was 20 years ago, the next best time is today” so forget about what you haven’t done in the past and get on with it starting right now.
Starting right now, take the time to set your objectives. This is what will ultimately put you in control of the process and your future. What’s important to you and the rest of the people involved?
Once you’ve decided what’s important, what you want the farm and its ownership and management to look like in the future – you are well on your way to successful farm succession.
Knowing what’s important, your ideal destination is step one. Step two is assessing what the situation is right now, something you can do on your own pretty well. Leveraging the insights of your peers is better, because they will force you to test your assumptions.
They will make you prove what you assume to be true actually is – so that whatever future plans you make are more accurate.
From my experience the real farm succession planning issues are not financial, not taxes, they are not business related at all in fact.
They are based on your ability or inability to talk with your family members honestly. If you can talk out the issues, concerns, dreams, and assumptions with each and every person affected by the decisions you will ultimately make – you will have the basis for your farm succession plan.
Once everybody’s on board with the future direction, seventy-five percent of the equation has been solved.
It is not your job to determine if what everybody wants is possible or not. Once you’ve decided what you want the future of the farm to look like, there are plenty of attorneys, tax planning experts, accountants, succession planning experts, and financial professionals who are ready willing and able to do the technical part.
Here are those seven key steps!
You must be willing to ask for help and then accept it.
For many of us this is the hard part. I always hesitate to ask for help (advice) unless I am committed in advance to go along with it. It would embarrass me and the person I asked if I just blew off their advice, the advice I had asked for. What works is when a group of peers, outsiders with no ax to grind are part of a continuing dialogue – a series of strategic conversations. Then it’s not about a single person’s insights but a collective back and forth around what has worked and what hasn’t for them.
Appoint someonw to help steer you through the process.
If farm succession planning was easy you would already be on top of it and not wasting your time with this article. What makes it so universally difficult is that generally no one is empowered to keep the process moving. From my experience the best person is someone directly involved in the business – a family member who has the best interest of the farm at heart, and willing to push
Set those critically important goals.
It is simple really. What’s important to each and every one of you? Take into consideration what your spouse wants, what your non-farm heirs feel is important and what sort of opportunity you want to leave behind for the next generation farmers in your family. Then consider what the situation is right now. From that point on it is a process of negotiation within the family, with their input of your peers and your advisors – to figure out what’s possible to achieve.
Redesign the farm business to fit your collective picture of the future.
The important thing is your family and its objectives, not “the way we’ve always done it” coming from your lawyer or accountant. This farm is yours – you know what you want the end result to look like. My bet is it can be done, if you are committed enough to tell your advisors that you want what you want when you want it and if that doesn’t work for them, you’ll find other better advisors. Remember who is working for whom.
Write down agreements you and your family make as a result of your discussions.
When there is communication – often with the insights of peers to expand the options, and a planning coordinator on board to keep the process moving – write them down. Each note can become a brick in the wall. Every decision is remembered and each little bit of progress leads to the next and the next. Don’t make the horrible mistake of waiting weeks and months and then trying to remember who said what about what when and under which set of facts.
Establish a timetable for the events that occur.
Farm succession planning will go on forever, but it should not last forever. I was featured on a television special shortly after the release of Passing Down the Farm in 1986. There was a young man, the third generation of their farm, holding his little six month old son in his arms. That baby is now an active member of the forth generation of the farm operation. For them and the millions of farm owners like them farm succession is a continuous process. However, there were many farm succession events and benchmarks along the way. You will be involved in farm succession planning forever – but it is not a full time job.
Schedule regular meetings to review your progress.
The meetings are the key to keeping the planning coordinator moving, keeping the advisors on task, and provide a visible opportunity to put checkmarks in the boxes of the steps that have been completed. These farm succession meetings keep the process on everyone’s mind, reassuring them all that this is important and it is being addressed – not just something than gets rolled out one a year to keep them quiet.
There is another option of course.
You can do nothing, put it off until it is too late, and let others control what ultimately happens to your farm and your family.
Without planning and communication, you will end up asking, “what happened, how did we get in this terrible situation?” instead of seeing the future you all secretly want.
There are numerous farm succession strategies, but they are not unlimited. And there are scores of farm succession professionals who can help you complete the process. The stumbling block is farm families who just won’t talk about it. Remember Pogo’s insightful statement in the comic strip from the old days, “We’ve found the problem and it is us.”
To me, if you operate your farm to achieve your family’s goals, you are more likely to run it as a business – a successful business because there is so much at stake.
That means you will do what successful businesses do, develop and implement a farm succession plan.
Wayne Messick
Click here for a detailed summary of: Passing Down the Farm in the 21st. Century
Recommended Reading
- Family Farm Succession Planning
- succession two
- gifting_TTF.m2p
- 10 Key Farm Succession Planning Points You Must Know
- Farm Succession Management Is Not a seat of The Pants Process
- Successful Farmers Know The Importance of Management Succession Planning
- Farm Business Succession Requires A Business Strategic Development Plan
- Farm Succession and Strategic Planning Group
[...] succession planning, and farm ownership transitin planning for that matter, there are lots of “keys” virtually all of then claim to be the most important [...]