5 Succession Planning Mistakes to Avoid

Fri, 28 Jul 2023 14:06:39 GMT

It’s time. You need to finally make your farm’s succession plan a priority. As you take a first or second or 20th step in the process, shoot to avoid some common landmines.

“Although there are a lot of scary stories out there about succession planning, there’s actually way more positive stories,” says Rena Striegel, president of Transition Point Business Advisors based in Des Moines, Iowa. “I encourage everyone to become one of those positive stories. Take that first step or break through the roadblocks so you can be one of those success stories.”

Listen in as Striegel discusses succession planning with Andrew McCrea on the Farming the Countryside podcast :

Here are the roadblocks Striegel sees farmers commonly face.

You engage only one professional.

“Our philosophy is a farm needs to have a collaborative team of professionals that helps them with the decisions and discussions around succession planning,” Striegel says.

This team can include a CPA, lawyer, business adviser, banker, insurance professional and others. By having all these viewpoints at the table, you ensure your plan is comprehensive and meets your goals.

“I personally do not believe any one professional can come up with a succession plan independent of the other professionals,” she adds. “We encourage farm families to work with their team to develop and implement their transition plan.”

Your plan is driven by tax implications.

Taxes, of course, are a big concern for farmers, especially with the new tax policies coming out of Washington, D.C.

“But if you do succession planning with the sole intention of reducing or eliminating taxes, you actually miss a lot of really valuable tools you could be utilizing if taxes were not the major goal,” Striegel says. “What we try to do with farm families is identify the true goal of the family. Almost always the goal isn’t: I want to transition in a tax-effective way. Most of the times it’s about making sure that my operation stays viable, multiple families can support themselves or the farm is going to be here for future generations.”

You ignore the elephants in the room.

Succession and transition discussions are stressful. Most of the time, they will include several topics you’d just rather not talk about.

“We don’t want to talk about someone dying,” Striegel says. “There’s a lot of things about these conversations that make people feel really uncomfortable. And so oftentimes, even families who communicate well tend to have a hard time being really open.”

If you fall into this category, Striegel suggests working with a mediator or facilitator to help ease the tension and encourage honest and focused communication.

You don’t draw lines between being a family and a business.

“The thing we have found that has really helped farm families is when we can separate the family dynamics from the business itself,” Striegel says. “We try to help families understand when conversations are business discussions versus family discussions.”

In having clear lines between family and business conversations and decisions, she says, you can remove some of the emotional pieces from the equation.

“When we separate those a little bit, it does make it easier for farm families to be able to communicate and make decisions together as a group,” Striegel says.

You procrastinate, procrastinate and then wait a little longer.

The worst option for farm families, Striegel says, is waiting until your farm or family is at a breaking point before seeking help. Don’t wait until a family member is threatening to leave the farm.

“Oftentimes when the family fractures, so does the farm,” she says. “If you think that you’re going to need help, it’s far better to seek that help out and bring those resources in to preserve your family relationships. Wherever you are, today is the day to start.”

Want to jumpstart your succession plan? The DIRTT Project by Transition Point Business Advisors is an all-inclusive guidance plan to help you transition your farm business. Learn more.

Field Work: Small Farmers, Big Stakes

Fri, 07 May 2021 19:56:57 GMT

By Laurie Stern

John and Kara Boyd farm 1400 acres on five parcels in Southern Virginia. Their farm is diverse and regenerative: They raise corn, wheat, soybeans, swine, timber and vegetables including radish, peas, asparagus and sweet corn. Kara Boyd is a member of the Lumbee Tribe of North Carolina . She grew up playing in the fields as her grandparents harvested produce.

“Being an Indigenous person here in North America, we’ve always been growing and producing our food,” she said.

John Boyd Jr. is a fourth-generation farmer. His father’s parents were straitlaced tobacco farmers along the James River and his mother’s parents were sharecroppers who sold bootleg whiskey to make ends meet. Boyd said he learned to farm from their different styles, and he also learned how to read people.

“I have a good take, based on my upbringing, of who’s telling the truth and who’s shucking and jiving,” Boyd said.

It’s a skill that has served him well. When he turned 18 in 1983, he bought his own farm from another Black farmer. He said he thought the civil rights movement had made things more equal, but he learned quickly that he was wrong. The local Farmers Home Administration agent would see Black farmers only at 9 a.m. one day a week. Everyone called them “Black Wednesdays.”

The farmers Boyd had looked up to were forced to wait their turn all day in crowded hallways where they compared notes about their treatment: being called “boy,” getting turned down for programs. At first, Boyd thought they were exaggerating. Then he showed up for his own first meeting. Boyd realized the civil rights movement had skipped Black farmers. The agent tore up his application, spat tobacco juice on his shirt.

“Just all sorts of stuff you wouldn’t think would come from someone who worked for the government,” Boyd said.

That experience and others that followed turned Boyd from farmer to farm advocate. He began collecting stories and statistics. He lodged discrimination complaints with local and national civil rights groups, founded the National Black Farmers Association , led marches, and in 1997 was a lead plaintiff in Pigford v. Glickman . That turned out to be the largest class action settlement the U.S. government has ever had to make.

John Boyd Jr. was at the front of the line. “I was able to get my land out of federal inventory, a little piece of happy change and some sort of apology,” he said.

A 1997 governmental investigation called USDA “a stubborn bureaucracy” that had used discriminatory loan practices to “force minority and socially disadvantaged farmers off their land.”^.

Protests and litigation continued because Black farmers had not been notified they were eligible for compensation. Pigford II was finally settled in 2010.

John Boyd Jr. is still president of the NBFA today. The NBFA and its allies in Congress are largely responsible for the $5 billion debt relief for farmers of color in the 2021 American Recovery Plan. In a recent editorial , Boyd said that much more needs to happen.

“The racism that was baked into subsidy programs for decades is now a feature, not a bug,” he wrote.

Meanwhile, he and Kara have a farm to run. Covid hurt. They couldn’t sell their livestock as they’d planned. The long harsh winter meant they were late harvesting and late planting.

“We lost soybeans because we weren’t able to get them harvested,” Kara Boyd said. But she noted that as a great source of nitrogen “they’ll just go back into the soil and feed Mother Earth.”

The Boyds would like to do regenerative agriculture demonstrations at their farm, and spread the word about how no-till and cover crop practices are paying off. They’d like to put in perimeter fencing to integrate livestock with row crops. They’d like to see more farmers of color own their land, and they’re working hard to make all that happen.

People