What does the future hold for your farm or ranch operation? And how do you plan to make sure what you build today is around tomorrow?
Answering those questions is key to building a working succession plan, and Montana State University Extension folks want to help. The MSU MontGuide “Transferring Your Farm or Ranch to the Next Generation” provides worksheets and information for each family member to help focus their thoughts and feelings regarding succession planning issues. The guide, which has been in print for several years, is still a valuable tool for those looking to the future.
Marsha Goetting, MSU Extension family economics specialist, says some families may avoid the process completely because of the economic, legal and family decision complexities of the process. Others may start the process, but abandon it to avoid conflicts that can arise from differences in goals, values and perceptions of fairness among family members.
Goetting adds that due to the strong bonds with the heritage and lifestyle, generation transfers are more frequent in agriculture than any other business. Unresolved conflicts can have major impacts on the long-term success and viability of the operation, as well as the transfer plan itself.
The first question to ask: Is the business profitable enough to transfer to the next generation? With the emotions that can arise from a transfer or succession plan, Goetting recommends enlisting outside help.
She knows that during estate planning meetings across Montana, before COVID-19, younger farmers and ranchers found it difficult to initiate the discussion about the transfer and succession process. “They fear older generations may perceive them as being overly interested in their inheritances,” Goetting adds. “On the other hand, when members of the older generations bring up the topic, younger generations may not be responsive They do not want to think about their grandparents or parents dying.”
Families who have been through the transfer and succession planning process suggest starting at an individual level, Goetting says. From there, the next step is to discuss issues in a larger group.
For example, if a father feels it important for the farm or ranch to remain in the family's possession but the wife is ambivalent, they need to come to an agreement before they begin the planning process with their children.
She says reaching a family agreement about goals before a business discussion helps negotiations run smoothly. While there may still be times of tension or conflict about values and roles in the family business, communication is key in keeping the process moving.
Goetting says preparing farm and ranch family business members for transfer and succession planning is a part of the older generation’s responsibility to the younger generation. “The legal and economic aspects of the transfer plan are important. Connectedness among the family business members and the working out of future management strategies, or succession planning, is also absolutely critical to the success of any transfer plan.”