Initiate the succession conversation
If I cash in on everything, I end up with nothing—no home and no retirement, explains John, a representative of farmers across America today. He’s invested hard work and hoped on a dream, yet he never knew what would happen.
Kevin Spafford, Farm Journal’s succession planning expert, says that circumstances like this happen all too often. At the age of 50-something, John’s future hinges on his siblings’ decisions after they read the will.
"It’s not enough to hear ‘you’ll be taken care of when we are gone,’ says Gary Hachfeld, University of Minnesota Extension educator. "You need to take legal written action to make the transfer happen. Farming heirs who are insecure as to their future are often unhappy.
Farmers like John think they get a free living, but in reality, they have to live there. Each season, John races against the clock and is responsible for the crops and the equipment, but not the finances. "It doesn’t have to be this way," Spafford says. "The warning signs are plentiful, but most won’t speak up. For some it’s a matter of respect; for others, the topic is too intimidating."
However, Spafford says if you’re intent on a farming career, you must be willing to acknowledge that something is wrong.
No matter which generation you represent, if your farm is managed without the components below, Spafford recommends initiating the succession planning process:
- Job descriptions, defined wages, benefits and bonuses
- Firm commitments regarding ownership opportunities and a process for transition
- Open discussions regarding the distribution of farm assets
- An increasing level of responsibility passing to the next generations
- A willingness of parents/grand-parents to relinquish control and transition financial accountability
"If you find yourself working harder for less and hoping for more, all the time assuming that other family members will understand and value your contribution, you might be in trouble," Spafford says. Heed the warnings before it’s too late.
Steps to initiate the succession planning process:
- Schedule a family meeting to discuss succession planning.
- Prepare an agenda based on factual information and concerns that need to be addressed.
- Seek common goals to enhance the farm’s integrity, ensure financial security and prepare others to lead.
- Deal with the obstacles that all families face in the process—equal versus fair, divorce and control.
- Agree to continue the process and create a plan to achieve the family’s goals for succession.
For more information about how to initiate the succession planning process, visit www.farmjournallegacyproject.com/Conversation.