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Farm Succession Planning, Keep the Conversation Going

farm succession

Developing farm management skills, similar to an exercise program, pays big benefits, but it’s also easy to slough off for another day.  Considering that only one-third of producers use business advisers or risk management tools, and fewer still do human resource, farm succession, or strategic planning, it is easy to understand why it keeps getting put off.

Consider Bill, a 63 year old third generation grain farmer.  He has not formalized his farm succession plan yet, but he has already had good discussions with his three sons, all in their 20s.  He isn’t ready to retire yet but is thinking about the topic.  All of his sons live off the farm and help with the farm part-time.  Two have expressed interest in coming back, but nothing has been decided yet.

Bill has not been pushing his sons to make a decision, as he wants them to decide on their own if they want to farm.  This can be the tough part, waiting for them to find themselves and decide if they want to come back.  He has seen kids who are expected or forced to come back to the farm, which often doesn’t work out very well.

Farmers need to first think about what they want and to understand that there are two systems at play on every farm, the family and the farm business.  This is where it’s important to understand both how the family is doing and how the farm business is doing.  Plan to have a conversation around who will be responsible for management, labour and direction; basically succession planning.

In Bill’s case, he still has a bit of time before he retires and his sons take over to make the decision about who might take over the farm.  He has attended many presentations about succession planning over the years, and wants to make sure he does things right, so that he can avoid the wrecks he’s heard about.

There are farm succession horror stories, as it’s really easy to do a couple of things wrong that can end up an absolute disaster.  The best way to alleviate a disaster is to start having a conversation on the topic sooner rather than later.  Share what everyone’s wants and needs are regarding the farm.

There can be a lot of apprehension around succession planning, and not knowing who is going to take over the farm.  The issue is further complicated when one generation’s vision does not match up with the vision of the next generation.  Typically, parents are concerned about protecting their wealth when they pass on the farm to their children.  As well, there is usually a fair amount of anxiety around what to do for the non-farming siblings that is fair and equitable.

The secret is to ask better questions of each other.  Set aside time to discuss the things that matter most.  Discuss succession plans with your children as a group, and individually.  If your family is having difficulty starting into the succession conversation, find a trusted farm financial advisor to help kick-start the process for you.  Start the process now, as it is difficult to develop a plan once someone gets disabled due to sickness or an accident or dies prematurely.

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