Laurie Wolinski, Extension Agent, lgw@udel.edu; Dan Severson, New Castle Co. Ag Agent, severson@udel.edu and Maria Pippidis, Extension Educator Family & Consumer Sciences, pippidis@udel.edu
How did the collecting and analyzing information work out? Hopefully each family member participated in that step, to the best of their ability and access to certain documents. Remember that by gathering all these documents and sharing them with the all the parties involved, a level of trust and transparency will be established – that will be critical as the process continues.
Once the gathering of important documents and some level of analysis has been done, the family members are in a better position to begin generating options about the way the farm will be transferred, how it will be financed, what business structure will be set-up, and what, if any, legal documents should be considered. This, again, is not a one-time conversation. It is an opportunity to investigate “what if” scenarios and contingency plans. Family members should think about the future and try to vision what the farm will look like. Family and business needs should be considered. And remember to think about retirement and health care issues.
It is recommended that the family members share “what if” scenarios with trusted professionals who are a part of the advisory team (accountant, lawyer, ag lender, insurance agents, financial planner, and/or Extension agent). By sharing, you have a better chance of learning if the family’s scenarios are sound, realistic, safe, affordable, and fair.
There is a checklist on page 7 of the Farm Succession Planning Checklist. We recommend reviewing that list. The list is very detailed, but it is important to the future of the business.
At the top of the checklist is: “Family members have attended an introductory workshop or seminar”. UMD and UD Extension are collaborating to offer a Farm Succession Webinar Series (Thursday evenings in August). We encourage you to join these sessions. It is quite typical for farm families to attend multiple succession planning workshops because of the nature of the topic and the time involved.
Let’s look at some brief “what if” scenarios. Remember, this is just in the very beginning of the process and these scenarios are preliminary. The notion is to put ideas, hopes, and dreams out there (and hopefully without judgement from the other family members) in order to keep the conversation going. If the family is talking about it, then more than likely progress is being made.
Son 1 – Would like he and wife to slowly take over (buy) the farm from Mom and Dad. Proposes that his brother (Son 2) rent land for the outdoor classroom and agritourism, so that it would be a separate operation/business from the farm. Son 1 feels that he has more invested in the farm since he has been working alongside of his parents. He also wants to live in the farmhouse.
Son 2 – Would like to see the farm transferred to the three brothers and wants to have some decision-making rights. Feels that he and his brother (Son 1) are perfectly capable of working and co-managing the farm together.
Son 3 – Wants to expand the farm to include a poultry operation that he would manage, He is not yet sure how this would happen on paper.
Mom – Has longed to travel and is looking forward to retirement. They have worked hard to build this family business and she wants to live comfortably in retirement. She also wants to move to a nearby 55 and older neighborhood. More than anything, Mom wants everyone to be happy in the end.
Dad – Is looking forward to retirement but wants to be around the farm to help Son 1 with the daily operations. He does want to travel, and is OK with moving, especially since he experiences chronic pain due to arthritis.
Attorney and other professionals will be able to ask questions of each party or scenario in order to offer potential solutions for ownership, business structure, fair vs. equal, etc. If conversations begin to sour among the family members, consider involving a mediator or facilitator to help the conversation stay on course.
Keep the communication going throughout and engage all family members. In the “what ifs” above, the daughters-in-law have not been mentioned. This is a lengthy process with many individuals involved. Keeping the family farm and the family close means sacrifices. Not everyone is going to get everything they want in life, and the final outcome of transferring the family farm is but one example.
Part 1 and Part 2 of this series were published in previous weeks.