Succession Planning For Farm Families

4min Read

It’s a process that can be complicated, emotional and just plain hard to start a conversation about.

That’s where Eric Brown comes in. Eric is a financial advisor with Legacy Capital Advisors, LLC and has been providing farmers and their families with practical, common-sense strategies to help them transition and preserve their legacies. In this episode of AgCredit Said It, Eric walks us through the biggest obstacles farm families struggle with and tips for approaching succession planning conversations.

Obstacles

It’s never the money, it’s always the people

“A lot of times everybody thinks it’s about the money,” says Eric. But he’s found that the biggest pain point in succession planning is always the people.

In many family farming situations today, one or more of the children may not be interested in coming back or carrying on the farm. Eric explains that, for example, Mom and Dad love all the kids equally and want to split assets fairly. But for the farm to have any chance at longevity and carrying on a legacy, things can’t always be equal.

Instead, determining what is equitable, not equal, will protect the interests of all sides and leave the legacy of the farm intact, and at the same time, prepared for the next generation to succeed.

Fear of the complicated

Succession planning can quickly become complicated - especially when there are multiple children or even neighboring farms involved in the transition. Yet Eric says the consequences far outweigh the lack of not having a plan in place. You may not want to broach the subject out of fear of upsetting siblings or parents, but there are tax burdens, legal liability issues and other complex costs associated with passing on farming operations and farm assets to the next generation.

“I’ve seen too many families that have been torn apart by a lack of planning and a lack of decision making,” says Eric. Succession planning is a situation that “just makes people freeze and not take action.”

Tips for Starting the Conversation

Plant the seed

“You start with your Mom,” says Eric. “Mom is the one that understands the pulse and the heartbeat of the entire family.” Simply put, Eric lightheartedly expresses it’s the easiest way to get the conservation started - by talking with Mom first and explaining the importance of having a plan.

Step into their shoes
 

When it comes to succession planning there’s a significant emotional component. “Most [farmers] have sacrificed blood, sweat, and real tears to get everything that they have,” says Eric. It’s important to put yourself into their shoes before starting the planning process. 

Eric notes that by approaching the process from an appreciative perspective centered around gratitude, the process will be a lot easier when you’re in the mindset to focus on the right things.

Have a heart-to-heart

The next, and hardest step, is to have a real conversation.
 

Once you understand what keeps them up at night, what makes them worry, and what their fears are after they're gone, Eric explains that you can start the process of determining what everyone’s wants, needs and desires are while also figuring out any areas of contention.

Start by talking about what everyone is on the same page about. What do Mom and Dad want? What do they think they want? Who wants to stay involved and what does that look like? Once everyone can agree on what the end goal should be, write down any areas of disagreement and tackle those next.

Work with a trusted professional

The best way to initiate the process is to have a trusted advisor who can not only serve as a knowledgeable facilitator to a tough family conversation but also serve as a moderator to communicate how the parents are feeling and their wishes. “A lot of times, Mom and Dad, they know what they want to say and they know how they feel, but they just don’t have the words to articulate it,” says Eric.

Succession planning discussions can be extremely hard, but by starting the conversation with your family sooner rather than later, you’ll be able to develop the foundation of a plan that successfully passes on the farming operations and assets to the next generation.