Every farm family has a story, and I have had the joy of spending two days with 380 Nebraska women in agriculture at their 40th conference. In her session, Katie Samples Dean, a very direct and farm-owner lawyer, suggested that many plans for succession and transition are foiled or are the wrong plan because Grandma did or does not understand the consequences of her decision-making.
While I waited to board my plane in Kearney, Nebraska, the story appeared again with a young farmer reaching out for answers, as his mom is not aware of the current reality of the farm’s business structure. She is listening to non-farm siblings for their input and not willing to even consider that her dead husband’s wishes, which she wants to honour, may not be the best direction for the farm or the family in the current situation in 2025.
Here are some steps to consider.
- Educate Mom and yourself as the successor with farm financial literacy. You need to understand your best options for structure of the business and navigating expectations. Mom may want the land to be divided to all children, even the non-farm heirs, but what happens now if there are addiction issues, divorce or other new circumstances that destabilize the family? When Dad passed, the farm was at a different stage. You need to observe the new needs of the family and the business.
- Be clear with Mom or Grandma about how much income is required to live at the level she needs. It would be wise to have a financial planner assess the level of financial security Mom has. Does she have enough income to live well for the next two decades? Does she have long-term care plans? Many women have life estates to stay in their homestead homes, yet the farming grandson who was promised the home cannot move because Grandma forgot that promise, and her non-farm child is telling her to stay put. Grandma, you have friends in town, will be closer to medical care and you can still come out to the farm often to pick raspberries and watch the cows. What is best for the entire farming family?
- Avoid paying tax. Samples Dean used an example of great-grandparents, grandparents and parents rolling land to the next generation, but they did not know or were not able to predict the future of very high land values and the tax burden on the next generation that had other plans for the high-value land. Her comment was to do lots of scenario planning so you can truly understand the consequences of your decisions. This is where being stubborn and not paying some of the tax as you go may hurt the succeeding generations.
- Allowing conflict triangles. It is not uncommon for people to share that the non-farm heirs have been spending a lot of time at Grandma’s house and creating discord. In conflict resolution, we encourage people to go directly to the source of the tension and have courageous, respectful conversations with the parties involved to create solutions. Grandma is hurting the family when she takes sides or when she is not honest about the tension points or avoids conflict resolution talks altogether.
- The deal is done, sister. The sisters got payment for land six years ago, and were happy then but are not happy now as land values have risen. The mindset of “we deserve more now” is the mindset of greed and entitlement that is fragmenting farm families. Grandma is terrified of family conflict, so she avoids the hard discussions. She also needs to be clear that the farmland is to be kept intact, and the siblings who are non-farm heirs may have access to land, but there will be long-term rental agreements in place with the farm heirs holding the right of first refusal.
- Buying out siblings who are doing just fine financially. This is a scenario that fragments families even after they are bought out. We bought out three quarters of land when my husband’s sisters were in their 30s. This would be a real hardship if we had to do this now, when the land value has gone from $67K to $450K. The real issue here for Grandma is: She wants all of her children to get some form of assets or cash, but she has little cash or liquidity because she comes from the generation that survived high interest rates in the 1980s but also put more wealth back into the farm business and did not save or use personal wealth strategies to give her liquidity on the personal side. The lesson here is: Don’t avoid saving in TFSAs or other investments for your golden years. Look at other financial plans to help you have more options to share and cascade wealth to your family. Again, seek the expert scenario insights of a financial planner.
- Hire a farm management specialist. This person can help all parties understand the cash flow reality of the farm and look for opportunities to grow income. These specialists are also a good reality check of what the farm can manage to pay out the partners wanting to leave the business or how to buy out Grandma’s shares.
- Don’t procrastinate. Dementia for Grandma may be knocking on her door. I met a woman in Nebraska whose aging parents do not have a plan in place, what Samples Dean calls “no plan,” and they both have signs of dementia. Planning is a very important activity, but heart attacks, cancer, accidents and other sad stories in the neighbourhood just don’t seem to motivate sane individuals to focus and execute a transition plan.
- Choose to act. You can stew and get mad at Grandma for taking sides, or you can get professional facilitation to create a better understanding of the financial realities of living costs for Grandma, the farm business team and the non-farm heirs to navigate expectations, create solutions and celebrate the next birthday party together.
What is your next step toward harmony through understanding going to be?
This article is provided for information purposes only. Readers should consult their own professional advisers for specific advice tailored to their needs. Information contained in this article may be subject to change without notice.
