Tired of the terms “unprecedented times” or “these challenging times”? I know they wear me down, but it’s hard to avoid the fact that right now things are different, and the future is a little murkier. Perhaps this is a good time to take control of some of that future, which can be a simple as creating a succession plan.
First, I’m not saying creation of a succession plan is simple. It can be challenging for diverse farm businesses with multiple family members.
Second, the planning can appear daunting at first — sometimes even appearing to be a mountain you can’t climb right now. Yet you’ll have to make the climb eventually.
When I talk to farm groups and the topic of succession comes up, I have joked — perhaps a bit too flippantly — that the family talk should start with one of those police body diagrams on the floor. While that’s a literal representation that you’re gathered to talk about what to do after someone dies, and one most will think crass, the point is, this is often a stumbling block to starting the talk.
No one wants to consider what happens when Mom or Dad dies. Yet, that's the very nature of a succession talk, and one that’s critical for you to not only protect what you’ve built, but also create a future environment where the farm can grow and thrive. And that’s not always easy.
Estate planning versus succession planning
I often hear estate planning and succession planning used interchangeably — and perhaps I’m splitting hairs — but I see the two as different. Related, but different.
Estate planning is about taxes and money. Often the tactics here are about minimizing the tax burden on you and your operation when someone passes. And while the estate plan can be an important part of the future of your operation, it’s just one part.
A succession plan includes the estate plan but is also the path for the future of the operation. This plan is also about the whos and whats of the future of the business. This is about the family and the future structure of the operation when a key decision-maker is gone.
It’s this work that can be hard because for many farm families, there’s the challenge of balance. What to do about the daughter who stays to work on the farm and build the operation for several years with Mom and Dad, versus the son who moves away to the city to take a different job? If planning for the future, how do you account for the sweat equity of the stay-on-the-farm daughter versus the claimed ownership rights of the city-son?
These are not easy conversations, but we’re in a time with economic upheaval, where tactics you’ve used to keep your operation going matter. And you want the operation to go on after you’re gone. Sure, the pandemic has changed the nature of many parts of global business, but farming remains a very personal business. And succession planning is a key business tactic not to be avoided.
During a pandemic, perhaps one thing we’ve learned is that we value a good conversation. Why not talk about your farm’s succession?