I recently told a group of Farm Bureau delegates that I wanted to change the world. The proclamation was punctuated with light laughter, the type of chuckle that masks thoughts like, "is he crazy, or did I misunderstand what he just said?” Yes, the group heard me loud and clear, and you read it correctly; it's my goal to change the world.
Such an endeavor warrants a lifetime of effort. However, changing the world may not be as impossible as it sounds. Every day we are bombarded with life-altering possibilities. Some are positive, so we give ourselves a pat on the back; some are negative, so we use excuses of bad luck to explain their effect. A single episode or a series of events can change the world.
Choosing to implement a comprehensive succession solution may change the world for multiple generations. It may have a profound effect on loyal employees and the community. From the moment the succession planning process begins to the last action on the to-do list, a family's world hangs in limbo. A set-in-concrete succession plan replaces the uncertainty and anxiety of the next generation or more to come.
OK, that's enough of my quest to change the world. But, really, keep sending your questions and comments. Think of it this way: Flooding me with your questions, only strengthens my resolve to change the world. Now, back to reality.
Q: When parents and a child or children decide to become partners what's the first step to take?
A From the beginning, dad and mom must quit being parents and sons and/or daughters have to quit being children in the work environment. You have to assume the roles of business partners. If your child's or children's actions are dictated only by your permission or if your blessing is required before making a decision, you are all guilty of not severing the natural parent/child roles.
The success of a business is reliant on the depth of the management team. The ability to mingle the various skills and talents of each team member and quickly make decisions is critical. Combining senior wisdom with youthful exuberance is a significant advantage of a multi-generational family business.
To share management responsibilities across the generational divide, there must be mutual respect. Each person must value the knowledge, experience, enthusiasm and work ethic of the other in order to form a complementary relationship.
Q: What can be done to prevent my farm from being sold in the future?
A If I had a nickel for every time I fielded this comment I would have a small fortune. Frequently, I hear: "My kids don't appreciate the farm, but I want to save it for my grandchildren.” Or, "I know, given the opportunity, the kids will sell the farm for cash; they have no interest in farming.” Some people believe: "The farm is mine to give, so I can stipulate how it is used.” In all cases, it's fair to say that once the farm is gone, you'll never get a second chance.
A gift is a present with no strings attached. Provisions and restrictions may counteract the recipients' ability to use the farm and could be a catalyst for diminishing gratitude leading to eventual neglect.
If it is your goal to prevent the farm from selling in the future, consider a trust with professional management and a commercial trustee. A professional management firm allows the asset to remain in the family until the beneficiaries (next generation) are mature enough to make decisions and exercise control.
Another option, though more complex and restrictive, is placing the farm to a private foundation, such as a university or charitable organization for use as an educational tool. You can also establish a private foundation dedicated to some form of agricultural education, or other use.
Kevin Spafford is the author of Legacy by Design: Succession Planning for Agribusiness Owners and is a certified financial planner whose firm guides farmers and agribusiness owners through the succession planning process. E-mail questions to SuccessionSolutions@farmjournal.com. Or, mail questions to Legacy by Design, 901 Bruce Road, Suite 160, Chico, CA 95928; (530) 345-7411.