Together, my wife and I have five children. I have two daughters and a son; my wife has one daughter and one son. We’ve always been a close family, and I treat her kids like my own. So far, none of the girls have shown an interest in farming. My son manages our cotton gin. Her son doesn’t help on the farm. He complains about the work and enviously comments that my son gets everything handed to him on a silver platter.
My son works hard. He’s the reason we were able to buy the gin and expand the operation. He wants to make farming a career. In this case, what is fair? I’m 62 and ready to begin planning for succession, but I don’t know where to start, how to do it and who should be involved.
Generate trust by including all of the children in family meetings
There are several planning differences that should be considered in a blended family. In your case, the family situation is clouding the real issue. Your stepson is not contributing to the success of the operation. He is not willing to do the things necessary to earn a position in the business. He might be playing the sympathy card to attract attention and garner favors. You know in your gut what is right.
Giving in to him and offering a position will only lead to trouble—and then nobody wins. To take control of the situation, implement a family employment policy. Though your son is currently part of the operation, he did accomplish specific things to prepare for his career. Document the level of education a person should attain to be considered for a position and how many years of off-farm employment are needed before a family member can apply for a job on the farm. The family employment policy should not be solely aimed at your wife’s son, either. One of the daughters and/or a son-in-law might want to join the operation someday, and you want to be able to show it’s the same for everyone.
Estate distributions and ownership might be affected by the nature of a blended family. In most cases, inheritances from a parent/grandparent to children remain in bloodlines. So ownership in the operation and the land might follow each parent’s children. There are cases in which a stepchild might receive ownership and/or an inheritance, but the procedures should be no different than every other situation.
Use the following guidelines to help you plan for succession:
1. An active family member should never have to answer to inactive owners.
2. In most cases, the operation might be separated from the land and each entity might be independently divided among owners. For example, owners of a land entity do not have to be active in the farming operation.
3. Whether owned by family members or unrelated parties, the operation should be supported by an operating agreement.
4. The operating and land entities each need a buy-sell agreement.
5. Err on the side of too much communication. You’ll generate trust by including all of the children in family meetings.
Each family situation is unique. Blended families have their own set of nuances. Though there is a variety of issues, solving the succession puzzle remains founded in a few key activities, including: good communication, using a planning model and overcoming the obstacles that get in the way. Most families want to maintain the integrity of the operation, ensure financial security and identify a strong leader to assume control.
To alleviate your fears, plan for the future and treat each person fairly; base your business decisions on sound reason, not familial emotion.
For more information on hiring and employing family members to create a businesslike environment, visit www.FarmJournalLegacyProject.com/employment_policy
Kevin Spafford serves as Farm Journal’s succession planning expert. His firm, Legacy by Design, just released eLegacyConnect (eLegacyConnect.com), an online succession planning resource for farm families. Send questions and comments to (877) 523-7411 or email@example.com.
- September 2013