family farm succession – Views from VanDeWalle

Farm Family Transition & Stressors

March 16, 2020 Brandy VanDeWalle

The agricultural economy is no stranger to stress. Stress from difficult weather, stress from low commodity prices, production risks and many other reasons contribute to the stress for our farmers and ranchers. One of the constant pressures and stressors family operations deal with is the successful transition of the family business to the next generation.

Recently, Dr. Ron Hanson spoke at a Farmers & Ranchers College program on “Strategies for Family Farm Success in the Shark Tank.” Hanson has been working with farm families for over 40 years and reminded participants that money, wealth and property, especially land always put a family’s relationship to the test. His analogies to sharks indicate that some families have “predator sharks” that lurk parents’ property or belongings, waiting to make a move and take a “bite” into family wealth or estate. An effective management strategy is to put yourself in the shark tank and begin addressing difficult situations and questions that might arise from uncertainties in agriculture.

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In order for families to be successful in transitioning the family farm or ranch, contingency planning must occur. Contingency planning, sometimes referred to as business continuity plans simply account for planning for the unexpected. “Developing and then implementing a business management plan to overcome unexpected changes to the ownership structure and management leadership is crucial for the continued success of the operation” (Hanson, 2020). Contingency planning is not easy and can result in a lot of emotional stress and even conflict, but families that are willing to work through and plan this before a life-altering situation occur are more likely to ensure their farming or ranching legacy will continue for future generations.

Hanson reminded participants that some adult children in the family may already feel they are entitled and that their parents’ estate is the children’s estate. Parents have the right to divide their estate as they wish and letting everyone involved know before they die can prevent huge family fights or court fights down the road. It is sad that family wealth can destroy family relationships and put an end to a family farm legacy. Transparency in estate planning is important for all involved.

Handling the stress and potential conflict upfront can reduce the stress, fights and issues that might occur when a tragedy, family illness or death occur. Dealing with large and unexpected events is stressful enough, so why not make a plan in advance so time and focus can be spent on the situation at hand? Hanson recommends farm and ranch families adopt five guidelines or planning steps to accomplish this process.

Adopt a vision. What is the vision for the future of the family farm/ranch? What is the legacy the parents wish to leave? This starts with the parents.
Draft ideas into a plan. This is where the parents must sit down with family members and discuss expectations of each family members. A planning document must be put in writing.
Organize planning resources. Families must work with an accountant, farm loan officer, estate or wealth planning specialist or an attorney. These people have the expertise and can assist the farm family implement the plan.
Clarify family member assumptions. Arrange for a family meeting so all adult children are aware of the plan. Any existing jealousies and resentments should be resolved and feasible solutions found.
Take control and set deadlines. Take action and get the planning process started. Break down the plan into stages so that the planning goals make the plan become a reality.

Family farming and ranching has many external stressors which cannot be controlled such as commodity prices and weather. Don’t let lack of planning create additional stressors in your life.

Programming

Strategies For Family Farming Success In The Shark Tank

February 13, 2020 Brandy VanDeWalle

Developing and implementing a business management contingency plan to overcome unexpected changes to the organizational structure and/or management leadership to a family farm is crucial for the continued success of a farming operation. This is an important step in preventing potential misunderstandings between farm family members as well as helping to avoid possible family disputes. Can a farm business survive a potential shark attack (unexpected change) and still prosper? An effective management strategy is to put yourself in the ‘shark tank’ and begin addressing the difficult questions and situations that might arise from these uncertainties in farming.

To aid farmers and ranchers with a business management plan, the Farmers & Ranchers College will be offering the final program of the 2019-2020 programming year on March 10^th. This program will take place at the Fillmore County Fairgrounds in Geneva, NE featuring Dr. Ron Hanson, UNL Harlan Agribusiness Professor Emeritus. Registration starts at 5:30 p.m. with a meal to start at 6:00 p.m., followed by the program, Strategies For Family Farming Success In The Shark Tank.

Hanson points out that few farming operations ever survive an unexpected change to the organizational management structure of their farming business, let alone a crisis situation within the family. Most farm families realize the importance of implementing a contingency business plan for if and when something ever happens, but few families ever accomplish this management goal. No one wants to be in the shark tank and be faced with a stressful situation. These issues (unexpected death, sudden illness, family dispute, loss of a key employee) are often never discussed and usually avoided. But what if it does happen? What might actually happen next? What impacts could result to the farm? To family members?

This presentation will identify the importance of implementing a business contingency planning process so that a farming operation continues when and if the unexpected actually happens. Striving to find answers as well as solutions is an effective strategy for a success when initiating a business contingency plan in case an unexpected change happens to the farm or family or even both at once.

Please pre-register by March 2^nd, to the Nebraska Extension Office in Fillmore County or call (402) 759-3712 to assure a seat and meal. Walk-ins are accepted, but may not get a meal. You may also complete your registration online on fillmore.unl.edu or http://go.unl.edu/farmersrancherscollege. Pre-registration will also save you time at the door!

Crops, Livestock, Programming

Farm and Ranch Succession Workshop

March 16, 2018 Brandy VanDeWalle

Persons of all ages are invited to attend a “Farm and Ranch Estate Planning Workshop” hosted by UNL Extension. This workshop will be held on Friday, March 23, 2018, 9:30 AM – 2:30 PM at Nebraska Extension in Saline County, 306 West 3rd Street, Wilber, NE.

Cost to attend is $20.00 per farm operation and $10.00 for each additional family member. Please preregister by Tuesday, March 20, 2018 by calling Nebraska Extension in Saline County, phone (402) 821-2151, to ensure that there are enough handouts, food and other materials. The registration fee will include your meal, handouts, and presentations.

One presentation will focus on the decisions and situations which should be addressed when thinking about how your farm or ranch estate will be passed. Topics will include: the need for planning, proper family communications, who makes the decisions, concept of fair versus equal, preparing to meet with an attorney, and much more. The presentation is designed to give some basic information to those that haven’t yet started to think about their succession or transition plan for their assets.

In addition, an agriculture attorney will be making his presentation to give agricultural families the basics of what they need to start planning their wills, trusts, and other end of life documents that need to be in order. The objective is to start the process of having the farm succession or transition planned.

Allan Vyhnalek, UNL Extension Educator for Farm Succession, will present. He was just assigned to the Ag Economics Department recently to work on farm and ranch succession and transition. Joe Hawbaker, Omaha based attorney, will make the legal presentation. He has worked with farmers for over 30 years and will cover the legal aspects of end of life decision making. Hawbaker will cover estate planning basics, including incapacity planning, then succession tools and how to use a decision tree.

Participants at previous events always report that they wished they would have started sooner, when asked about the value of attending the presentation. The consequences of not having an appropriate plan in place can jeopardize the financial stability and the future of the family. More importantly, we need to have our wishes known to others so the legacy of the farms and ranches can be passed to the individuals or entities intended.

For more information or assistance, please contact Randy Pryor, UNL Extension Educator, phone (402) 821-2151.

Crops, Livestock, Programming, Uncategorized

Passing the Farm to the Next Generation

March 18, 2016 Brandy VanDeWalle

At our final Farmers & Ranchers College program for the programming year, Dr. Ron Hanson from the University Of Nebraska – Lincoln Ag Economics Department spoke on the Importance of Family Farm Succession. This is never an easy task, yet essential for the farm to be passed on and able to financially operate. Most importantly, it is important to maintain relationships with family members and honor the wishes of the parents who intended for assets to be transferred a certain way.

Hanson had eleven challenges families face in order to being this process.

First consider “Who is family” and is entitled to owning the farm. Are in-laws considered family? Usually excluding in-laws will backfire and cause hard feelings.
It is difficult for parents to not play favorites with their adult kids. Parents should be fair and equitable, which is different than equal. Unfortunately, there are adult kids who are greedy and plan to retire on their parents’ assets, which is not an acceptable retirement plan. Parents should consider who has always taken care of them and which kids will care for them in end of life situations.
Controlling parents need to give control of the farm/ranch to the adult kid who is farming. Serve as mentors and hand over responsibility to the future owner.
Consider when farm ownership will happen. How will those changes occur?
Think about if it is possible to keep the farm in the family. Are there kids who actually want to farm?
Too often families don’t talk about the “what-ifs”. If a parent or adult kid were to tragically die tomorrow, are you prepared for that?
If parents don’t agree on how to transfer assets, more than likely nothing will get done.
Some children feel they are entitled. Children should RESPECT their parents and agree to their parents’ decision. Your parents don’t owe you anything.
Greed has become a curse of family wealth and assets. Wealth can destroy family relationships and end a family legacy. No farm is worth losing family relationships!
Families that don’t communicate openly about the parents plans are more likely to be unsuccessful with a succession plan. Parents must talk openly and honestly to all children – preferably at the same time. Parents should ask their children:
1. Have we as parents done anything to make you not get along as a family when we are no longer here? If so, please tell me. Then apologize.
2. Is there any reason you kids can’t get along as a family?
Each family farm/ranch should have a vision. Family members should share this vision.

Family farm succession is time consuming, complicated and emotionally draining, but essential! After all, consider all of the hard work you have done to keep it going through rough economic times; why wouldn’t you put a plan together to protect it?

Programming, Uncategorized

Business Succession & Estate Planning Workshop

February 20, 2016 Brandy VanDeWalle

The Beginning Farmer and Rancher Network’s Farm Succession Series continues in March with a workshop locally offered in Geneva at the Fillmore County Fairgrounds from 10:00 a.m. – 3:00 p.m., March 2nd. The free workshop will cover business succession and estate planning for farm and ranch owners, families and beginning farmers and ranchers.

Topics will include:

Stages of succession planning, contribution & compensation, balancing the interests of on-farm and off-farm heirs;
Importance of communication, setting goals, analyzing cash flow, and balancing intergenerational expectations and needs;
Beginning farmer loan and tax credit programs;
Use of trusts, wills, life estate deeds and business entities (such as the limited liability company) in family estate and business succession planning;

Lunch will be provided. To register (and for questions) call the Rural Response Hotline at 1-800-464-0258 or the Fillmore Extension Office in Geneva at 402-759-3712.

The program presenters are Dave Goeller, Deputy Director, Northeast Center for Risk Management Education, UNL & Joe Hawbaker, Agricultural Law attorney, with Hawbaker Law Office, Omaha.

This workshop is made possible by the Nebraska Network for Beginning Farmers & Ranchers, the Farm and Ranch Project of Legal Aid of Nebraska, National Institute of Food and Agriculture, the Nebraska Department of Agriculture’s Next Gen, Nebraska Farmers Union Foundation, University of Nebraska Extension Office Fillmore County.

Crops, Programming

Tough family Conversations

March 16, 2012 Brandy VanDeWalle

Conflict; I admit I am not a fan of it, but conflict is not always a bad thing. In fact, “different is not wrong; it’s just different.” If you had the opportunity to attend the last 2011-2012 Farmers & Ranchers College program for the season, you might recognize those words from Elaine Froese. In Discuss the Undiscussabull, she highlighted some important points every farm family should consider.

Froese points out that most parents want to retire with a secure income stream, a happy family who comes home, and not having to deal with conflicts and serve as a referee. So ask yourself, what do you desire for your parents? Do you wish they can enjoy their hard earned income and live life as they desire, or do you desire them to be in the middle of an ugly sibling fight and feel as if they are only wanted for their money or assets? Froese poised the question, “What do you as parents owe your children?” An overwhelming majority of participants, said, “Nothing.” I know personally I hope my parents are able to enjoy retirement and certainly don’t expect any inheritance from them, after all they raised me and as a parent myself can only imagine the grief they had to put up with along the way.

Often times conflict and hard feelings among one another are from miscommunication or not fully understanding each others’ expectations. Sit down with one another, not during a family meal or holiday, but during a family meeting so no one is blindsided and separate family from business. Froese provided ten tools for instigation of the tough issues:

1. (Parents) TAKE CHARGE. Don’t let your children run all over you, no matter how old or stubborn they might be, it is your decision what you want to do with YOUR money/assets, but make sure you take time to discuss it.

2. Come from curiosity. Don’t assume you know what each side is thinking. Clarify everyone’s expectations.

3. Ask deeply. What are you trying to say to each other? Ask open-ended questions and be soft on the person and hard on the problem.

4. Play with possibility. Be positive and imagine the different scenarios that could transpire. Use a “talking stick” or some visual tool which allows only the person with that object to talk; everyone else should listen. Don’t prejudge each other or the situation.

5. Really listen. Build understanding by ensuring that you truly understand what that person is saying.

6. Ponder and perk, not prod. Its okay to give you time to process what is being said. It’s best to “let silence do the heavy lifting” and leave if you get too upset and might say something you will regret later. Consider the other’s perspective.

7. Cultivate trust. Be accountable for your actions and what you say you will do. Build a family culture of fairness, respect and commitment. Remember that fair is not always equal and equal is not always fair.

8. Respect boundaries. Clear each other’s roles. During family meetings, don’t think of Dad as “Dad” or Mom as “Mom”, think of them as the farm’s manager or president so if you don’t agree with that person’s decision you can at least appreciate they are making a business decision, and you should not take it personally.

9. We all end up in a box. “Why fight over stuff you can’t take with you in a box?” Have you ever seen a funeral procession with a trailer full of things behind it?

10. Extend the olive branch. Pass on authority and learn to “let go”. Stubbornness and pride won’t build families. Create a family legacy of open communication and relationships. Parents should ask their children, “When did you ever get the idea that you are entitled to xxxxx?”

Elaine then explained how there is an emerging group of baby boomers coined as “waiters”. They wait for their parents to die so they can collect their money or possessions often because they haven’t lived within their means, have difficulty holding jobs or other financial difficulties. Instead of taking the necessary steps in financial planning, they plan on their parents to give them a “nest egg” to retire.

Then there is the dynamic of the non-farm siblings coming home to “collect” from mom and dad, often with no understanding of the family farm or finances. The child who put sweat equity into the farm should be given credit for managing the farm through the good times and the bad. Too many families are destroyed by not just taking time to sit down and openly and clearly communicate with each other; using a neutral person as a mediator is better than just giving up. Michael Pantalon in “Instant Influence” asks the following: why might you change, how ready are you to change, think of positive outcomes, and what is the next step?

More information on family farm transitioning from Elaine can be found on her website. No farm is worth the price of losing a family; start those tough conversations now!