Are your aunts and uncles still talking to your farm parents? Do you have a broken branch of your family tree that has been severed forever due to estrangement? Would you like to have a healing story for your farm family transition with no drama?
“Help, my siblings want farmland!” is one of my most viewed blogs. Our current reality of higher interest rates and rising land values needs to be addressed early on in your transition conversations.
Fault Lines: Fractured Families and How to Mend Them is a key resource for understanding how families end up in the painful experience of not talking. Author Karl Pillemer cites one of the key reasons people become estranged is money and inheritance. There are volcanic experiences of conflict over wills or unfair distributions of wealth. There are also unmet expectations over violating norms of expected family behaviour.
One of my accountant colleagues says, “There are next-generation farmers out there who come across as very entitled.”
We mix expectations about money, and what money means to different people is different. Then we add the need for the farmland to stay intact to be a business and top it off with poor communication or conflict avoidance of talking about tough issues. This is how the volcano blows up.
Five years ago, I crafted a new approach to the definition of fairness in farm transition. I believe fairness for both farm and non-farm heirs is helping everyone in the family be successful. The degree of wealth for the parents and the children will likely be different.
What if you have always been wealthier than your farming parents? These siblings tell me they just want Mom and Dad to enjoy the fruits of their labour and have a decent life as they age in place on the farm or move to a different location with a great lifestyle.
Those who are not happy about the plan for the land to stay intact with the farming heirs feel they are not “worth anything” because the story they are telling themselves is “Money equals love.” The unhappy heirs may also be hanging on to financial promises made to them by one parent without the knowledge of the other.
Let’s change the script.
Let’s ask the non-farm heirs what they expect from the farm wealth and why. Managing expectations means getting people to express their thoughts on paper or verbally so you can manage assumptions. Are you willing to be financially transparent with your children to be clear about the amount of wealth that is available for transfer? I suspect you may be terrified of having a financial transparent conversation with your heirs because you don’t want to manage conflicting expectations. Working ahead of this conversation may involve a coach or financial planner who can facilitate your family meeting to ensure it is safe and respectful. The coach also has an inside track because they are already aware of the individual expectations of the heirs and parents due to the pre-meeting confidential coaching sessions with the family members.
Merle Good, a transition planner in Alberta, has offered one solution: a long-term rental agreement for the farming heir to rent a certain portion of land from a non-farm heir, and in 15 years the farmer has first right of refusal to buy the land.
Unfortunately, many farmers I coach do not want to be in business with their non-farm siblings.
Some children are single and need to create wealth on their own. These siblings are often seen as “needing more” than those with partners as two-income families. The “fights happen on the way to the funeral home,” as Jolene Brown says, when expectations have not been set out before death.
I am still a big advocate of gifts with a warm hand, not a cold one. When parents are very open about the gifts to all the heirs, there is room for appreciation, gratitude and a positive attitude. Taxes are a logistical, tactical task of transition that lawyers and accountants can advise on, but who is going to help you deal with the emotional factors affecting planning and help you decide which expectations of wealth transfer are workable? It is wise to have a group family meeting with the financial planner, accountant and lawyer present to help explain why Mom and Dad are making plans for wealth transfer. If you don’t understand, ask more questions so you are clear as to why certain decisions were made.
If you are stubborn, hurt and emotionally torn, choosing to stay away from the family meetings, then you have chosen not to have vital input into decision-making. You have a consequence for your stonewalling; you get left out of understanding the intent of the benefactors. Choosing not to talk or giving your family the silent treatment is a decision with painful consequences, as you don’t get input in the wealth transfer decision process.
Another key issue is embarrassment. Founders may be humiliated and embarrassed they have not managed cash flow well or fallen on hard times, not paying attention to building their personal wealth beyond the farm. Many farms have all the wealth in the farm. This drives parents to think they need to “sacrifice” for the farming child to succeed.
Who is asking the farming child to take on debt to help finance some lifestyle income for the parents? Successors who think they should be “given everything” really flame the fires of conflict with siblings who don’t know the innate details of low wages, delayed compensation and other transfers of money between parents and farm heirs. You can clear this up quickly with open, respectful communication.
Sharing the farm vision with all family members
- Treat the farm like a business and be transparent with finances, cash flow, debt and who is expected to play a role in the business long-term.
- Share your wealth transfer intentions with all family members. Ask them, “What does fairness look like to you?” You may disagree, yet you can explain your perspective and seek to understand what heirs are needing and wanting. Parents are not responsible for making all their children economically equal.
- Don’t hide behind your advisers and say, “The accountant or lawyer will just tell me what to do.” Be very curious with everyone and ask probing questions to drill down on expectations. Let people know what is reasonable and workable for your current and projected financial personal scenario.
- Hire a financial planner to be clear about what you need for income streams for the next three decades.
- Share your business vision and dreams for the farm. Ask all the family members what kind of relationship they would like to have with the farm’s activities.
- Hire a coach to help you navigate conflict, resolve issues and create healthy workable communication for family harmony through understanding.