The word "retire" isn't part of most farmers' and ranchers' vocabularies. That's one of the big reasons succession planning is different for agriculture compared with other industries.
Allan Vyhnalek, Nebraska Extension educator in farm succession and transition, has covered the topic of succession for several years at the Husker Harvest Days Hospitality Tent stage, and he notes retirement won't be on the agenda in his discussion this year.
"I used to almost chide farmers and ranchers to think about planning for retirement," Vyhnalek says. “I don't think any farmer or rancher ever plans to retire, so I'm not going to talk about that anymore. However, I will tell you that unfortunately, you don't get to avoid the pine box. Everybody goes there in the end. I want you to think about what's going to happen to your assets when you're gone. You can't take them with you — I've never seen any equipment or money in a casket with the deceased. You have to do something with those assets."
Vyhnalek notes it's important to have a plan in place ahead of time. Each day at 11 a.m. at HHD, Vyhnalek will discuss succession planning, including what he calls the "circle of inaction."
"With the circle of inaction, we understand we need to have a plan," Vyhnalek says. "So we meet with a lawyer or financial planner. It's hard to think about. It's mental work. If I'm a farmer, I'd rather think about when I need to irrigate next. So we put it off. After a period of three weeks to three years, you think, 'I should have a plan.' So you go back to step one."
Vyhnalek also will outline assumptions the older generation makes in succession planning that don't always turn out to be correct. For example: Someday, this will all be yours; my son or daughter would never sell the farm; I don't need a plan because the kids will figure out how to divide the assets on their own; and, the kids get along with each other now, they'll get along fine when I'm gone.
"Sometimes the parents are the glue that holds it all together," Vyhnalek says. "The first question you need to ask is, 'When it's all said and done, are you still going to have a family?' Think about getting through that and the commitment of keeping the family together. Don't make that assumption."
"Phases of transfer" is another important topic Vyhnalek will address.
"Sometimes, right away, the younger generation thinks they need to manage the entire farm or ranch, and the older generation thinks, 'No, you need to prove to me that you can manage everything first,'" he says. "Sometimes the younger generation get frustrated because they aren't making management decisions quick enough, and sometimes the older generation doesn't know how to give up control."
A big component of any good succession plan is communication. Vyhnalek will address the importance of listening to make sure one party understands the other's perspective, rather than simply waiting for their turn to speak.
However, it's also important to maintain a direct line of communication among anyone involved in the planning process — including attorneys, financial planners and insurance agents — to ensure the plan is integrated moving forward.
Most importantly, Vyhnalek advises farmers and ranchers to get the planning process started.
"More often than not, planning is deferred until some critical point," he says. "If there's a sudden death, then your back's against the wall and you could make bad decisions because of stress. It's important to make sure we think about this while everything is going well, instead of during a crisis."