Don’t Ignore Farm Succession Planning

Farm succession is the elephant in the room that many farm operations don’t want to acknowledge. While some family farms have it figured out, for many others it’s a great source of anxiety.

As with many family businesses, farmers would typically like to see their operation remain in the family. In fact, farm owners are often more sentimental than other business owners.

There’s a connection to the land. It’s where you work and how you define yourself and it’s often where you live and where you were raised. In Saskatchewan, most farms are third or fourth generation. A hundred years in the same family is a source of pride.

For some operations, there clearly won’t be another generation of the family. There are no kids interested.

In many other cases, succession is being assumed, but no one has established when or how. The absence of a plan and the lack of communication can create a living hell for both the parents and the kids.

While the older generation wants succession to occur, it may be hard for them to give up control. The younger generation may end up in their 30s, 40s or 50s and even though they work on the farm, they have little or no ownership and little or no part in the major management decisions.

Succession planners tell stories of 70-something farmers who ask when they should start showing their financial records to the “kids.”

Tax and legal advisers could use secondary education in psychology and family services. Families sometimes arrive and ask for a succession plan, but they don’t know what they want to accomplish. They’ve never really talked about it.

Which kid or kids are going to take over? How long will the older generation remain involved? How much income does the older generation need for retirement? Is there enough income potential for the farm to provide a living for the younger generation and if not where will that money come from?

You have to feel sorry for in-laws. They’re often viewed as a threat by the older generation. “What if Bob and Christine break up? We don’t want to lose half the farm to the daughter-in-law.”

This fear can precipitate inaction. Eventually Bob and Christine are likely to have problems because Bob is treated as an employee rather than the emerging owner.

Families often operate on assumptions. It may be assumed that Bob wants to take over the farm. Maybe that isn’t the case.

On the other hand, Bob may assume he is taking over the farm, but his dad and mom want every dollar they can get for retirement so their plan is to just sell the place to the highest bidder.

The key is talking. What does everyone truly want as an outcome? For family harmony, it’s probably a good idea to hear from non-farming siblings as well as those who are farming.

Don’t expect everyone to know what they really want right away. We often don’t know our own minds until we’re forced to take a stand. Once everyone’s personal aspirations are understood, accountants and lawyers can get to work on the nitty-gritty of how to make it happen over a set period of time.

The experts say it’s never too early to start farm succession planning, but you have to know what you’re trying to accomplish. You can’t ignore that elephant in the room.

Kevin Hursh is a consulting agrologist and farmer based in Saskatoon. He can be reached at [email protected]

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