Passing a family farm on to a younger generation may seem like a given, but sometimes good intentions are shattered when a family faces an unexpected life event. Loan officer Mark Robertson, in the Lexington and Yadkinville offices of Carolina Farm Credit, says one of the biggest obstacles he sees for farm families is the lack of a transition plan.
One of the pitfalls Robertson often sees is the two generations not talking openly and frankly about expectations. “Often, they each have good ideas but they don’t really put their heads together and work out a plan. Often the older generation isn’t ready to let go, and the younger generation isn’t patient enough to allow the parent some time to work through the transition and let it happen,” he says.
In addition to considering how to pass a farm from one generation to another, transition plans need to be considered in the event of other major life events that can place a family and farm business in jeopardy: death, divorce, dismemberment or disability, discouragement, disagreements, and disasters, sometimes referred to as the “dreadful Ds.”
Robertson said he has seen disagreements between the older and younger generation totally derail the transitioning of a farm from a father to a son, and the result is that the farm is no longer in operation. A conversation about expectations, followed by a plan all can agree on, even if a mediator has to be involved, can help families make the transition that is beneficial for all.
While a good business plan is a roadmap to success, a good transition plan goes hand-in-hand with it to help safeguard a business. It’s the tool that is necessary to help you weather a dreadful D.
“A yearly assessment is important,” he says. “An important resource in considering transition plans is a trusted advisor. It might be your loan officer or it might be your financial advisor, but you need someone who has a vested interest in your well-being and is willing to have hard conversations with you.”
Robertson says he often refers people to Tom Haarmann, a Money Concepts financial services manager with Carolina Farm Credit in the Statesville office, to assist with developing a transition plan. Haarmann uses a tool to gather information from farm families that helps guide them through the initial steps of transition planning. It helps families determine what their wishes are. That is one of the first steps in working toward a plan, says Haarmann. “If they can get a basic plan down a good estate attorney will be able to give them a good framework.”
Haarmann shares more about specific tools to consider in part 2 of the 3-part“Transition Planning to Safeguard Your Farm and Family.” Additional reasons why transition planning is crucial are covered in “Every Farm Needs a Safety Net” in the fall issue of The Leader. # # #
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