Every farm family has a story, and I have just had the joy of spending two days with 380 Nebraska Women in Agriculture and their stories at their 40th conference. A session led by Katie Samples Dean, a very direct and farm-owning Nebraska lawyer, suggested many plans for succession and/or transition are foiled, or are the wrong plan, because Grandma did or does not understand the consequences of her decision-making.
While I waited to board my plane in Kearney, the story appeared again, with a young farmer reaching out for answers as his mom is not aware of the current reality of the farm’s business structure. She is listening to non-farm siblings for their input and not willing to even consider that her dead husband’s wishes — which she wants to honour – may not be the best direction for the farm or the family in the current situation of 2025. Here are some steps to consider:
Education
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Educate Mom, and yourself as the successor, with farm financial literacy. You need to understand your best options for structure of the business and navigating expectations. Mom may want the land to be divided to all children, even the non-farm heirs, but what happens now if there are addiction issues, divorce or other new circumstances which destabilize the family? When Dad passed, the farm was at a different stage. You need to observe the new needs of the family and the business.
Forecast and plan
Be clear with Mom or Grandma how much income she needs to live at a given level. It would be wise to have a certified fee-for-service financial planner assess the level of financial security Mom has. Does she have enough income to live well for the next two decades? Does she have long-term care plans? Many women have life estates to stay in their homestead homes — yet, for example, a farming grandson who was promised the home cannot move because Grandma forgot that promise, and a non-farming child is telling her to stay put. Grandma: you have friends in town, will be closer to medical care, and can still come out to the farm often to pick raspberries and watch the cows. What is best for the whole farming family?
Know the tax load
The problem here is with avoiding paying tax — that is to say, pushing the taxes forward with the capital gains on the land, among other accounting/tax issues. Lawyer Katie used an example of great-grandparents, grandparents or parents rolling land to the next generation — but they did not know or were not able to predict a future of very high land values, nor the tax burden on the next generation who had other plans for the high-value land. Katie’s recommendation was for lots of scenario planning so you can truly understand the consequences of your decisions. This is where being stubborn and not paying some of the tax as you go may hurt the succeeding generations.
Conflict resolution
Don’t allow conflict triangles to solidify. It’s not uncommon for folks to share that non-farm heirs have been spending a lot of time at Grandma’s house and creating discord. In conflict resolution we encourage folks to directly go to the source of the tension and have courageous, respectful conversations with the parties involved to create solutions. Grandma is hurting the family when she takes sides, or when she is not honest about the tension points, or avoids conflict resolution talks altogether.
The deal is done, sister
Say, for example. sisters got payment for land six years ago and were happy then — but are not happy now as land values have risen. The mindset of “we deserve more now” is the mindset of greed and entitlement which is fragmenting farm families. Grandma is terrified of family conflict, so she avoids the hard discussions. She also needs to be clear that the farmland is to be kept intact, and the siblings who are non-farm heirs may have access to land but there will be long-tern rental agreements in place, with the farm heirs holding the right of first refusal.
Asset-building
Buying out siblings who are doing just fine financially is a scenario that can fragment families even after they are bought out. We bought out three quarters of land when my husband’s sisters were in their 30s. This would be a real hardship, though, if we had to do this now, when the land value has gone from $67,000 to $450,000.
The real issue here for Grandma is she wants all of her children to get some form of assets or cash, but she has little cash or liquidity because she comes from the generation that survived high interest rates in the ’80s but also put more wealth back into the farm business and did not save or use personal wealth strategies to give her liquidity on the personal side.
The lesson here is, don’t avoid saving, whether in TFSAs or other investments, for your golden years. Look at other financial plans to help you have more options to share and cascade wealth to your family. Again, seek the expert scenario insights of a financial planner.
Seek help
A farm management specialist can help all parties understand the cash flow reality of the farm and look for opportunities to grow income. These folks are also good at current-reality checks on what a farm can manage to pay out the partners wanting to leave the business or on how to buy out Grandma’s shares.
Don’t procrastinate
Dementia for Grandma may be knocking on her door. I met a woman in Nebraska whose aging folks are what Katie the lawyer calls “No Plan” — that is, they have no plan in place, and they both have signs of dementia. Planning is a very important activity, but heart attacks, cancer, accidents and other sad stories in the neighbourhood just don’t seem to motivate sane folks to focus and execute a transition plan.
Choose to act
You can stew and get mad at Grandma for taking sides, or you can get professional facilitation to create a better understanding of the financial realities of living costs for Grandma, the farm business team and non-farm heirs to navigate expectations, create solutions and celebrate the next birthday party together. What is your next step toward harmony through understanding going to be?
