Why You Should Tell Your Kids About Your Farm Succession Plan
By Heather Venenga
It might be out of our comfort zone to take charge of such a monumental element of our family’s financial future.
Women might have not traditionally made the big decisions on the farm, so they may not be used to, nor comfortable, grabbing something by the horns when it comes to making other decisions. But when it comes to succession planning, it’s more than the money. It’s our family’s well-being. In a mother’s heart and mind, her job is to ensure family harmony. We need to be the ones that do it, otherwise, it might not get done.
Once you realize you must take action in your farm succession planning efforts, there are a couple of things to be mindful of as you navigate the conversations and collaborations of farm succession planning.
Don’t Let Your Heirs Control Your Planning Process
The biggest mistake I see people make is bringing all of the kids into the decision-making process. Unfortunately, it just doesn’t work that way. Do not involve your heirs along the way. Make the decision and then let them know.
You can’t expect the whole family to sit in a financial advisor’s office or gather around the kitchen table and come to a consensus together. As the parents, you see the complete picture.
Each child, no matter how great they are, is going to have more self-interest intertwined in their ideas and responses. Therefore, they may not be capable of looking at it from the viewpoints of their siblings.
The other thing you can’t be sure of is whether the kids will be honest about their wishes if asked. Oftentimes our adult children make comments like “It is your money you should spend it,” “you raised us, kids, well and do not owe us anything,” and “I do not want your money/farm.”
It is human nature to say things like this.
Your children love you and don’t want to seem greedy or entitled. But the fact of the matter is that once you pass away they will want what is rightly theirs.
If you have any doubts about whether leaving the kids out of the decision-making process is the right choice, think about it this way — you built the farm, and have sustained it to this point by making the right decisions. You can also make the right decisions about succession. Use your success up to this point as proof to yourself that you will continue to make the right decisions.
You don’t need to let the kids know about the decisions until the decisions have been made. You’ll go through the process, write everything up, and only then should you sit the kids down to talk to them about the plan.
From start to finish, you’re looking at a typical timeframe of about six months to get a secure plan in place. From working with the financial advisor, then the attorney, it takes time to dial it in. After about a year, you will be ready for the conversation with your heirs. And, you don’t have to do this alone. Most good advisors are willing to sit down for that conversation to help you.
Take this typical scenario for example –
I might have a family reach out to me because they have decided it was time to take action and they have lots of questions. They have three children – two of them stayed home and lived on the farm while the third son moved away. At the time that they call me, the oldest son has recently come home to the farm after living far away for a while.
At this point, the parents aren’t sure whether having their son take over the farm is going to work out, but they feel like they need to let him try. Things are uncertain at this point, and they feel a ton of pressure because they didn’t want to hurt one of their kids as they figured out the future of their farm. I tell them we should get together and discuss this.
So, after the Christmas holiday, we talk again.
Mom is in tears, saying, “I don’t know what to do. We didn’t raise our kids to fight and be so rude to each other, but that is exactly what happened over Christmas. What I don’t understand is that it seemed to come out of nowhere. They just all of a sudden were mad at each other about things like pictures in the basement, old school work, and other things like that. Little things. Things that shouldn’t mean so much in the big picture.”
I tell them I didn’t think this was about the things in the basement, but rather about the farm. They are uncertain about the farm’s future, tensions are growing over that, and they are letting it out over other things. The parents agreed that the fighting had to be over something bigger.
They cannot bear the idea of how much the kids would fight over the farm if they were fighting this much over seemingly trivial things. It is during this moment that Mom and Dad realize they not only need to act on their succession plan but that they need to do it now.
So, then we get to work with their team and put a plan in place.
They share the plan with the kids once it is done. This settles much of that angst. They will come to terms with it, and they will finally agree that this was the fairest plan possible.
This scenario leads to another lesson.
Don’t Wait To Tell Them
Tell the kids as soon as you can once the plan is in place.
You want them to have time to process this and sort it out in their heads.
There is absolutely no benefit to keeping things secret once you have the plan set up. Wouldn’t it be better to set aside any potential disagreements early on rather than catching your heirs off guard once you are gone? They will be emotional enough as it is, so let’s minimize the surprises.
If you are ready to set a plan in place for the future of your family and the future of your farm, please don’t hesitate to reach out to me at email@example.com.
At the least, I’m happy to be an informal sounding board as you begin the farm succession planning process.