I just heard an estate planning lawyer, Chris Delaney mention that he is seeing farmers “sheltering in the tactics” rather than embracing what I call the “emotional factors affecting planning.” Delaney is the author of The Naked Opus, a novel approach to estate planning. It’s a very good read.
Please understand, the foundation for great transition planning is having open conversations with yourself, your spouse, your successors, and your non-farm heirs first.
As a farm transition specialist I want to save you a truckload of money. Get clear first on the expectations of your family circle BEFORE you start listing your needs and wants with your advisers. Doing a series of family meetings before you start engaging professional accountants and lawyers will make your conversations with advisers more profitable and efficient.
A young, highly educated farm successor is crying on the phone because her farm founder widowed dad has lost sight of the family vision to have two successors, not just one. He is happy to accept a crafted plan from his accountant, but not happy to have it challenged. This is folly to believe that advisers can create a transition plan without the input of all the farm team players!
Delaney’s “do not shelter in the tactics” means you go straight to tactics like tax strategies, rather than taking the time to figure out the needs and expectations of your farm family first. This is the family circle, the place where dynamics and emotions can keep planning flowing or stuck!
Many of you are not happy with the increasing tension on your farm this winter. It’s not only the pandemic that has amplified the conflict, it’s your procrastination and unwillingness to have collaborative decision-making with the next generation. You need to step back, take responsibility for your poor choices, and reset.
The process of open communication is life giving and will change the culture of your farm for the better. It’s a mindset shift. Culture beats strategy, it’s what you believe to be true, your behaviour with each other, and how you make decisions.
Conflict is to be embraced as a business risk management strategy. You attack the issues, not the people on your farm team.
As a member of the Canadian Association of Farm Advisors I have high regard for lawyers, accountants, farm business specialists, financial planners and other mediators who understand that this transition journey is a team of advisers’ event. CAFA recently held an online six-hour session to glean skills on finding fairness in farm transition with Chris Delaney, Patti Durand from FCC, and financial psychologist Dr. Moira Somers.
Here’s the way to not hide behind your advisers:
1. First you have to understand what you want. Then you need to be able to explain WHY you want what you want to the rest of the family circle, farm and non-farm. If you are not comfortable doing this with your family on your own, then invest in a third-party facilitator or coach for courageous conversations.
In 2020 I had over 170 farm families reach out for ways to find harmony in understanding for the transition process. I am now building a stable of coaches to join my virtual coaching work on Zoom, as there is much work to do. Folks can get new conflict language like, “I think it’s time we come to the table to talk, I feel overwhelmed not knowing where to go next, I want us to be clear about the income streams, and financial viability of our farm, and I need to build family harmony in this process.”
2. Explore options with your successors in the management circle, family participation policies that deal with compensation, roles, exit plans, learning plans for successors. You can find many tools to kick-start these conversations with my Farm Family Toolkit at elainefroese.com.
3. Talk about timelines for sharing ownership of the farm. This is the section of planning where you start to talk about structure, tax strategies, and timelines for transition of ownership. It is also likely here that you start to feel overwhelmed with all the plans you need to put in place.
The father who takes a predetermined plan from his accountant is looking for someone else to create solutions for his business, and this creates huge mistrust with the successors. Don’t jump to Step 3 until you have done the work of Step 1 and 2.
The three circles of planning are: 1. Family. 2. Management. 3. Ownership.
You can use advisers in each step, making sure that you have robust family conversations in the process.
Where is it written that succession planning needs to be tough? Again, another mindset shift is necessary. Planning for change is a journey. Ask me for my binder tabs to help you get organized. Go to elainefroese.com/contact.
Some farm businesses are highly complex, so the steps outlined above are also more complex, but ultimately “love does not read minds,” you cannot assume what other farm team members are thinking, feeling, needing and wanting.
Every farm is unique. Every family is unique. Ultimately the farm transition journey should enhance family relationships and secure the legacy of the farm business.
Use professional advisers to help you reach your goals. Don’t expect them to create workable plans when you are not engaged with navigating your family circle first. Dealing with the emotional factors affecting planning is your first step. You can do this.
I’m here to help.