Last week, I started talking about some of the ‘prep work’ when it comes to transitioning the farm well to the next generation. I want to dive into that a bit more this week. I had mentioned how important it is to set clear expectations. One area where expectations are critical is around timelines.
Clear timelines need to be established around milestones on the path to both ownership and leadership transition. That doesn’t mean the timelines can’t ever be adjusted based on what’s happening along the way, but creating a transparent pathway is helpful.
That way, everyone knows what the timeline goals are – when Dad would like to retire and be a ‘helping hand’ in the operation, or when the next generation will be responsible to lead a particular aspect of the farm’s operations.
This level of clarity can help reduce confusion or misunderstandings around when, how and how much leadership power will be transitioning. And that helps both sides prepare better and realize when they need to step up or ‘stand back’ a bit more.
Bring in the team
Another key factor in a smooth farm transition is the team that the family brings around themselves. The professionals you choose to help you navigate the planning process can make or break it, to some extent.
Some farmers think their current attorney is the only professional they need in managing the farm’s transition. Most attorneys do have knowledge around the legalities of estate planning. But it often takes a bit more than just the legal side – there’s a lot of communication and facilitation that’s involved.
Farm families have often found that having a guide for their process– someone who takes the family through from start to finish, and helps bring in other appropriate professionals along the way, including an attorney, accountant and financial planner – is an important player. This guide – a legacy advisor – can help lay out some of the ‘ground rules’ for communication, help the family establish expectations and timelines, and ‘keep the ball rolling’ in the planning process.
Getting the different needs and desires of the family members out on the table is where a farm transition plan should start. And that needs to happen long before you go to meet with your attorney to get legal documents in place.
Getting from here to there
When it comes to the legacy we want to leave the next generation or the hopes we have of one day running the farm, we can’t leave it up to chance. None of us knows how many days we have left on this earth.
Planning needs to start with where the farm is at today. This means starting by looking at the farm’s current financial situation, as well as the family’s specific goals for the future. Looking at where we’re at right now while knowing what our hopes for the future are – for example, bringing in three families from the next generation – can help us get realistic plans in place now for how to achieve those goals.
We can determine whether there are any gaps are between where we are now and where we’d like to be in the future. We can plan for what we’re going to do to achieve the goal – and be able to start working toward it right now, rather than waiting for ten to twenty years.
Being proactive and planning for the future we want is a way to start making it happen –to make the ‘handoff’ as smooth as possible, for both generations. You can talk with business advisors for the farm who have worked through this process with other farm families to get it started for your family today.
The opinions of the author are not necessarily those of Farm Futures or Farm Progress.