Audience feedback regarding fairness in farm transition:
“Dad passed away four years ago and I’m one of four kids, but the only one farming. Everything is planned out, but it’s difficult to have others (non-farm siblings) quantify the equity that I’ve put into the business for the last 30 plus years along with mom and dad, and for them to understand it’s not just a simple split four ways anymore.”
“If parents don’t want to take responsibility for the family dynamics for on farm/off farm family members, whose responsibility is it? How can we move forward if parents block the process?”
“How can you deal with a father that doesn’t want to start selling land to one farming child at a reduced price due to other children not being able to purchase? He sees it as unfair and is worried about what the other non-farming child will think he’s owed something.”
Farm owners are working on a transfer of labour, management, and ownership. As parents, you are working on navigating expectations regarding the transfer of personal wealth. Many folks have little on the personal wealth side of the ledger and are depending on the farm solely for income. It takes courage to explore what your farm family successors and your non-farm heirs are thinking and feeling.
Families are avoiding hard conversations. First you need to have a willingness and readiness to do the work.
The farmer who has put 30 years of labour into the parent’s farm would like their widowed mother to quantify the equity they have invested in the business, “sweat equity” or delayed compensation. Perhaps written agreements where the he or she takes a wage for many years at lower than market rate, say $50,000 a year when the going rate was $75,000. The difference of 30 times 25,000 is $750,000 of equity that is not transferred. This is a simplistic example, but if nothing is written down and there’s no tracking with agreements, then things not measured cannot be changed easily.
“It’s just not a simple split four ways anymore.” Exactly. This mindset of “equal” isn’t workable with high land prices and the need to keep the profitable, viable business intact. Parent’s personal wealth assets can be allocated to the non-farm heirs, or there can be long-term land rent agreements to the farming child if a non-farm heir owns farmland. But most farmers don’t want to be in business long-term with their non-farm siblings and in-laws. The underlying fear is the farm successor “cashing out” in a few years which can be handled with legal agreements.
Where is it written that it’s a parent’s responsibility to keep all their children economically equal? Each heir has different needs to be successful. Many farm families have already given economic boosts with education tuition, trucks and down payments on houses. What you do you owe your children? Discuss this. Ask your non-farm heirs precisely what they expect in their inheritance.
Parents blocking the transition process is the common barrier of parents avoiding conflict and choosing to do nothing. Not deciding to act is a decision. It’s procrastination and fear. The responsibility for positive change in making transition decisions lies with all family members. The successor can be the driver of the process to hire facilitators, or coaches, to get unstuck. More farm families are getting ag-informed therapy to deal with deep-seated anger or frustration to find better ways of navigating dynamics with family members who don’t communicate well or chose to be inflexible with their thinking. Give younger folks permission to leave a non-workable dynamic to start a farming venture with another family or on their own. It’s called “Necessary endings when things don’t work out,” according to author Henry Cloud.
Fear of conflict and lack of harmony or “getting along” is real for folks who don’t face the current reality and work to create solutions. To get clarity of expectations, you need to come to the table for safe, respectful conversations. If you can’t create this on your own, get professional facilitation. You also can only be responsible for your own choices and behaviour.
Marilee Adams, author of “Change Your Questions, Change Your Life” has a choice map to choose the learner mindset path, not the judger mindset. Ask yourself:
- What happened?
- What do I want for both me and others?
- What can I learn?
- What assumptions am I making? (Do you assume everyone needs to get the same inheritance?)
- What are the facts?
- What are my heirs thinking, feeling and wanting?
- Am I being responsible?
- What is possible? (Financial planners, coaches, accountants and lawyers have seen success in other farm transition, so they can help you explore possibilities.)
- What are my choices?
- What’s best to do now?
And here’s my closing question, “Tell me what fairness looks like to you, and what do you need to be successful?”
