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Time to talk

If your idea of communication is shouting at your wife (or kids) to close the gate, or when a son or daughter approaches you with We've got to talk, you

If your idea of communication is shouting at your wife (or kids) to close the gate, or when a son or daughter approaches you with “We've got to talk,” you immediately wonder what law they've broken, it might be time to focus on honing your communication skills.

“Communication is difficult when it's around a very passionate, emotional issue,” says Claire Birkeland, a Minnesota-based psychologist who specializes in systems therapy.

That's why she recommends families begin the estate-planning process with the simple question, “What does the farm mean to you?” Though the step may seem small, it helps everyone begin to share their feelings.

As a result, people begin to identify their roles in the family business. Some may want to continue in the business, others might want out.

Next, she recommends all involved sit down and write out what they want to do, what's important to them, and what affects their bottom line, keeping in mind there are no right or wrong answers.

At this point, families are thinking and talking about estate planning and determining what they'd each like to happen. Once this starts happening, someone outside of the family can step in and lend a hand in the process.

“It's awkward to say, ‘This is what's going to happen to my assets when I die,’ but it needs to be done,” Dave Baker, a farm transition specialist with Iowa State University's Beginning Farmer Center in Urbandale, says.

As a mediator in the estate-planning process, Baker begins by having families, and the individuals involved, identify their values — what they hold dear. Such an exchange provides a platform for families to begin shaping their vision for the future of the business, or a chance to buy into that vision if it's already established.

“What are we trying to do?” is a question Baker often asks families in an attempt to develop a mission. “Are we trying to transfer a business?”

If transfer is the mission, then goal setting and strategy development come next. During this time, other resources such as articles, outside ideas, or personnel may need to be brought in to aid the planning effort.

Handing over the reins

Start early, Birkeland suggests. The process of talking about the future of the farm actually begins during “individuation” — the time when children are differentiating themselves from each other.

Parents help out with this by asking, “What do you want to be when you grow up?” or “Where do you want to go to college?” Children bring it up by asking such questions as, “What is the future of the farm?”

“The sooner you can talk about it, the more natural it becomes,” Birkeland says.

While it's good to start talking about plans for the future at an early age, true transitioning of management and assets starts later in life. Baker suggests beginning 5-10 years before the controlling generation's complete retirement.

“A big part of our program deals with the older generation being a mentor to the younger generation,” Baker explains. “They're going to teach that young person the ropes, teach them how they've been successful.”

It's a process of handing over the management reins. Instead of being thrown into full decision-making right away, which often occurs due to health problems, try to ease into management over a four- to five-year period.

“Children become better managers knowing their mentors are there from time to time to look over their shoulder to make sure no major mistakes are made,” Baker says.

Baker sees two options for folks ready to retire. The first is to sell everything and get out, putting the money in the bank. What you get is a fixed income with a 1-2% growth in a bank account.

The second is to start a new family in agriculture, generating 12-15% in returns, sharing the business with another family and leaving part of your legacy.

Starting a new family, whether it be a relative or not, has a ripple effect beyond your operation. It affects the community, as well.

“Someday you're going to have a eulogy,” Baker explains, “and they'll talk about how you started young families and what it meant to the community, church, school and businesses in town.”

However, there are times when the older generation doesn't want to give up control. After all, there are twice as many farmers over the age of 65 as under the age of 35. And did you know that half of agricultural land is owned by folks older than 75?

Giving up the reins can be a big change for the older generation, Baker says. “They're not treating it as a business; they're treating it as their farm, their life. Can you imagine giving up your life?”

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A good place to talk

Getting everyone together at the same place and time is often difficult in today's fast-paced society. Dinner-table conversations are less frequent, and some families only gather during holidays.

But many communication experts advise against trying to talk during holidays because it's a period of heightened emotions. If possible, Birkeland suggests meeting outside of the farm environment in a neutral location, such as a restaurant or coffee shop. After all, some of the best conversations about the farm occur on trips to bull sales or at a café along the way, she adds.

“When couples have to discuss something that's very intense, I suggest going out,” Birkeland says. “Just the fact they're in public helps provide a boundary they're aware of, and they won't lose control as easily, or at all.”

Dealing with generations

In general, agriculture has an inter-generational flavor that involves grandparents, parents and children, and each generation has different values. Someone who lived through the Great Depression, for instance, likely has a different perspective on borrowing money than a younger family member. In such cases, it's helpful to know how to talk “inter-generationally.”

“Quite often with families, we discuss each generation's values and what they think is important,” Baker says.

The older generation needs to explain to the younger generation why it wants to pass on the farm. The younger person needs to explain why he or she wants to farm.

In inter-generational discussions, Birkeland suggests using “I” statements when expressing concerns. Using “you” statements seems more accusatory and is likely to make people defensive. In discussion, structure statements as “I am frustrated when…” rather than “You make me so mad!”

For more communication tips, see “Simple rules” on page 15.

Non-farming heirs

Any family might have individuals who decide to pursue careers outside farming or ranching. That doesn't mean they're cut out from the estate; their role just may be different, Birkeland says.

Baker is a proponent of dividing assets equitably, not necessarily equally. Those joining the business are sometimes treated a little different than non-farming heirs. Non-farming heirs may have received part of their inheritance through college tuition, down payments on a house, or other financial means.

Ultimately the generation that controls the assets will decide the disposition of the estate. Consider the goals established by the family. If it's a goal to keep the farming heir on the farm, land and assets might not be divided equally.

Whatever is done, be open and honest in communicating what's happening. Having everyone involved in estate planning is key, and people often find comfort by having an established plan.

Editor's note: Kindra Gordon is a Spearfish, SD-based freelance writer and former BEEF Managing Editor.

Parents take the lead

Parents are in charge and need to be responsible in initiating the estate-planning process, says Ron Hanson, University of Nebraska-Lincoln agriculture economics professor.

“Don't be naïve. If mom and dad don't do it, how many families do you know that can sit down and work things out when the parents are dead and gone?” he asks.

Though talk of death can be difficult, he says families must discuss a variety of different scenarios. Just a few of these questions might include:

  • What would happen if one parent/spouse died, and/or the other remarried?
  • Which children will have the chance to gain actual ownership?
  • How will the non-farming children be treated in order to be fair and equitable?
  • When will the transfer happen?

Once parents have made their decision, they need to communicate their wishes to all family members, including in-laws and adult children who have moved away from the farm, Hanson says. And the plan should be presented as a “we” by both parents to minimize division between the family.
Kindra Gordon

Simple rules

“If you follow these four simple rules of communication, life gets a lot easier,” says Claire Birkeland, a Minnesota-based psychologist who specializes in systems therapy.

  • Say what you mean and mean what you say. Give thought to what you say, don't just shoot randomly from the hip.

  • If someone doesn't agree, or if you feel someone snubs or dismisses you, don't take it personally.

  • Don't assume. Ask.

  • Do the best you can, then feel secure in it.

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Deal with disagreements

Randy McKee of Estate Planning Services Inc., Rapid City, SD, has found many families don't talk about estate planning to avoid conflict or because they're afraid of losing control of their farm or ranch.

“But if we don't communicate, the first thing that usually happens is a family feud. And you'll probably produce some of those undesirable outcomes, such as inadvertent heirs, expensive legal battles or losing control to someone you don't want to have it,” he says.

McKee says many families can minimize family feuding with open communication and a well-documented business plan in place.

Better communication starts with respectful listening. “Everyone's opinion counts — especially to them,” he says.

To gather input when working with families, McKee uses a system he developed called the Family Vision Matrix® which essentially lets every family member share their vision. For instance, how do parents envision retirement years compared to how children envision their parent's retirement years?” McKee asks. Those two answers are almost never the same.

“The point of the matrix is to uncover the issues where family members agree and where they don't, and who is being reasonable and who is not.”

But most importantly, he says, everyone has a chance to weigh in. McKee says he's had 100% participation from families he's worked with because he tells them from the beginning: “This is your one chance to be part of the solution or part of the problem.”
Kindra Gordon

Plan early

John Baker, coordinator of the National Farm Transition Network, advocates that farm transfer questions and conversations happen sooner than later. Producers between their 40s and 50s should be thinking about retirement succession plans.

“You can't transition a business in two weeks. You can sell a farm or let the business dissolve, but if you want to transition the business to the next generation, it needs to start much earlier,” he says.

Baker adds, “Succession isn't just about getting assets into the next generation's hands. Assets and the business are two different things. That's why you need to plan for that transition.”
Kindra Gordon

Use written job descriptions

Family communication can also be enhanced through written job descriptions for each person working on the farm or ranch. Sarah Fogleman, a Kansas Extension economist, says, “Whenever I find a family in conflict, writing job descriptions is the first thing I have them do. It helps them recognize that often each person has two roles: business and family. And the more we can separate business conflict from family, the better the situation will be.”

Similarly, Jolene Brown, a professional speaker on farm family communication and estate planning, advocates listing each function and entity (cattle, crop, hay, marketing, etc.) and making a chart that assigns who is responsible, who is accountable, who must be consulted with, and who must be informed.

“This clarifies roles and helps with salaries, decision making, and goal setting. It also makes it pretty evident if only one person is the decision maker for the business or if the transfer of leadership is actually taking place,” she says.
Kindra Gordon

Have a willing attitude

Directed toward the older generation in the family business, Dave Goeller, University of Nebraska Extension farm/ranch transition specialist in Lincoln, says, “You can't control the business forever. You need to take the steps to make it available to the next generation.”

Ron Hanson, University of Nebraska-Lincoln agriculture economics professor, believes the point can't be emphasized enough. He says a common perception among parents today toward their adult children is this: “You can buy the farm, but just remember I still own it.”

That's the wrong attitude. “It sends the message to children that the parents are still in charge. Passing ownership is one thing; passing control is another. There's a world of difference between the two,” he says.

That said, Jolene Brown, a professional speaker on farm-family communication and estate planning, cautions parents not to give too much to their kids. “Parents, you don't owe your kids an estate,” she says. “Take [financial] care of yourself first. Many give their kids way too much, and they expect it to be given. What you do owe your kids are a discussed, legal estate plan and tools to help them with the details after you're gone.”
Kindra Gordon

Step by step

In implementing a farm transition plan, Dave Goeller, University of Nebraska Extension farm/ranch transition specialist in Lincoln, suggests four stages — testing, commitment, establishment and withdrawal.

He calls the initial testing phase a “dating” phase. It allows for the successor(s) and current operator to try out the arrangement on a trial basis for a period of time. Usually a wage is paid.

When the testing stage is completed, it's time for the successor to decide if he or she is ready to make a commitment. Then, after another period of time, the successor will become established and the retiring generation withdraws.

Goeller says this process is flexible in how long each phase lasts and when decisions are made, but a timeline should be determined up front. He reiterates, “This is a process over time; it's not a one-day event.” But the turnover can't be too quick — or too slow.
Kindra Gordon

Other points

  • Consider holding regular family meetings that allow for problem solving, decision making and helping keep everyone informed.

  • Children should never be made to feel obligated to return to the farm if their career interests or dreams lie elsewhere.

  • Get professional input to legally document the estate plan in writing. Be sure to update your plan over time as situations change.

  • Have an agenda established ahead of time.

  • Alternate the chairperson duties so there isn't just one individual with the power.

  • Be respectful toward one another.

  • Use a professional facilitator if the issues are especially contentious.
    Kindra Gordon