You may have noticed that phrases such as generational farm planning, farm succession planning, and estate management planning are all interchangeable. That’s because they essentially mean the same thing. No matter what you call it, it all comes down to one thing — planning ahead for your family’s well-being. But, if everyone knew this was the right thing to do, why do most people drag their feet on it?
There is a huge misconception that a well-crafted estate management plan is just for the wealthy. This is a big misconception that holds tons of families back from planning ahead. It’s also important to note that estate planning is different from a will, although a will may be included in an estate plan.
An estate plan from a good team will ensure that your wishes are carried out – who leads the farm once you’re gone, who takes care of the land and the animals, who has rights to the property, etc.
Generational farm planning, or estate planning will ensure that everything is legally binding and that your cubs aren’t left fighting once you are gone. It will ensure that taxes are covered, thus keeping the government from showing up and making decisions for you. On top of that, this will help make sure that the heirs are going to get along once you pass away. A good estate plan is for absolutely everyone.
According to the US Department of Agriculture's National Agricultural Statistics Services only 23% of farms have a real estate management plan. This is why we’re having fire sales. What do I mean when I say fire sales? I have a story to explain that one, and this may sound like someone you know because this is a common thing that happens.
I became aware of the situation at a stockyard cattle auction one day. A family with 3 kids was auctioning off the farm. One of the sons worked the farm his whole life. The daughter worked for a daycare, and the other son had a job with the state. No succession planning had been done for their farm. Mom passed away about five years before this, and Dad just three years following her. Everything went on for a while with the oldest son running the farm. However, last year, the brother who worked for the state retired and decided he wanted his share of the farm.
In a situation such as this where there is no plan in place, the default by law is that all assets are split evenly between the children. This is the case for money, property, and any other assets. When challenged, the courts do not consider family relationships, only what they consider an equitable share. Once the older brother decided he wanted his share, it went to probate court. The court predictably ruled that it had to be split three ways. Unfortunately, the only way to do this was to sell, hence the reason they were at auction on this day.
The parents had not done any planning, so the kids (who were now adults) were fighting over the assets and treating each other horribly. The daughter was so upset she could barely speak, and the son that ran the farm was understandably in a foul mood, as he was now losing not only his livelihood but on top of that he was losing the legacy he would have passed down to his son. He was devastated and commented that their dad would hate to see this happening.
We all felt that emotion to one extent or another. It was so hard to see this happen to what was once such a good family. A good plan can prevent this type of situation, so the goal is always to have your plan in place before something like this happens.
No matter your financial status, the size of your bank account, or your age, estate planning preserves the love of your family, preserves the legacy that you have worked so hard to build, and it’s way easier to do than you would have thought.
So, how do you do it? I offer several educational workshops in person and virtually throughout the year. Contact my team and we will get you signed up for a time that is convenient for you. Please don’t wait. It’s important for your future and your family’s future to plan ahead when it comes to generational farming.