Here are questions and comments regarding succession from you, our readers, dealing with family dynamics, generational concerns, and emotional barriers that come up during the farm transition process.
Froese: There’s a classic response. That’s a confusion between the difference between an estate plan and a succession plan. An estate plan is for your mortality, it’s for when you die, but a transition plan is for the living – who is doing the labour; the management; the ownership. It’s a very common misconception. It’s not an estate plan, it’s the succession/business plan. Yes it has estate ramifications, but that’s the unfolding of the succession plan – once you have a succession plan. You need to plan for it being alive first, and then you need the risk management plan and the estate plan for when you pass on.
In 1997, they did a study [in Guelph, Ont.] and 20 per cent of Ontario farmers didn’t have a will, because of the reasoning if you get one, you’re going to die. What kind of logic is that?
Froese: Farmers don’t retire; they need to reinvent themselves. People will not let go of a role or a responsibility on the farm, unless there’s something more exciting to move toward. I don’t expect farmers to retire, I expect the roles and responsibilities to shift.
In my case, my husband is 62 years old and he is a co-manager of the farm with our son. Many of the calls are deferred to our son, but there’s always collaborative decision making and respect for the wisdom and experience of the founding generation.
What gives your life meaning and purpose when you are no longer the main owner of the business? The second question is, what does a good day on the farm look like to you when you’re 62, 72, and 82?
Froese: It’s important to pay attention to how old you are. In your 20s, it’s all about independence; in your 30s, it’s about mastering success; in your 40s, it’s about taking power or control of your future destiny; in your 50s, it’s about quality of life; in your 60s, it’s about legacy and starting over; in your 70s, it’s about elderhood blessings; and by the time you’re 80 and 90, [the farm] should be handed over so you can give gifts with a warm hand, not a cold hand.
The resistance in letting go is based on fear. So my question becomes, why is this person having a hard time transitioning? What are the biggest fears? Some of the biggest fears usually are loss of wealth and loss of identity. In Ontario, a fear would be changing ownership of the land and then five years down the road, the millennial flips it and sells [the land] to a developer. Typically when I ask people what they’re afraid of, it’s the loss of wealth and the fear of burdening the next generation with too much debt.
When I help families I follow my three C’s: clarity on what everyone expects, certainty of timelines and agreements, and can we actually get it done. So, if you have an 80-year-old who expects to die working on the farm with their boots on, then that’s good, you have a clear understanding that they are not ever going to let go of showing up on the farm. They may also expect to hang onto their land until it passes through their will. I’m against that because I like to see land transition with a warm hand, not a cold hand, especially for a younger generation to be able to have equity that they can borrow against.
One reason millennials are getting frustrated is because there’s a hard work ethic of the boomer and the traditionalist. They say “talk is cheap, we don’t have time to plan, there’s too much work to get done here.” What they’re not realizing is that they’re in a polarity – an unsolvable problem [with opposite sides]. We plan, and then we act. We act, and then we plan. We work, and then we play. We play, then we work. But some people are stuck on the work side, and some people are stuck on the act side. Some people never go to the planning side. There’s also the underlying question of what is the planning going to cost? That’s why it’s important to look through all the available online resources first to get a better understanding of the process.
Froese: A succession plan is never done. It’s a living document. It’s not an inch thick of paper that you pay $20,000 for and put on the shelf. It’s a journey, not a destination.
Where is it written that this plan would be outdated in 10 years? Because we’re not going to have a 10-year-plan, we’re going to have a three year plan and we’re going to keep revisiting it and it will get better, and better as our business grows and as our team defines how the vision of this business will transpire. It’s just like your will, and your will should be updated whenever there’s a significant change in your family or your business.
Froese: I hear that all the time – the pressure to get it right the first time and avoiding the mistakes that farmers typically make. Farmers hate to be gouged and they hate to make mistakes, because they’re problem solvers and they’re fixers. They don’t want to make mistakes, but the fear of not getting it right the first time is called paralysis by analysis. So, they are doing nothing because they are afraid to make a mistake, rather than saying, “let’s get this process started and see how it evolves, and if we make some mistakes then there will have to be course corrections.”
For instance, we [Froese’s own family] have made mistakes with some of the accounting advice we got that wasn’t as workable as it should be, but that’s also because the tax laws changed. So you make the best decisions with the best information you can at that time, and you don’t beat yourself up for it. Keep moving forward. That’s a choice. But it’s also a farm culture thing: are you allowed to screw up on this farm and make a mistake? On our farm we are, and there have been some huge, very expensive mistakes. When a mistake gets made, the person owns up to it and says, “this is how I’m going to fix it,” and then they go and fix it. We all make mistakes.
Froese: Turn that into homework. I have an exercise called “What if?” where you brainstorm and ask yourself every “what if?” question. After one of my seminars, a woman told me she was going to brainstorm every “what if?” question on the ride home and then ask it to her parents. That’s what happened in my own succession plan process . . . it’s called contingency planning. What if there’s divorce? What if I die and my spouse remarries?
These can be very emotional questions. One of the healthy conscious behaviours is to express your emotions. You can say, I love you and respect you deeply but I’m also very aware that divorce happens on farms, so we have to talk about the divorce question. That question was put to the table by our outside facilitator, and we had these conversations.
I lost my sister to a drunk driver at age 22; I lost my mom at age 64 to an asthma attack; I lost my father to Alzheimer’s. I lost my father-in-law to a brain shrinking disease and my mother-in-law to lung cancer. I’ve done palliative care four times. So in my world, these aren’t “play questions” – they actually happen.
These are all really helpful questions, and for the emotional part, everybody gets to choose their response. So you don’t get offended by saying what if your wife dies and you remarry, you talk about what you would do because it’s very helpful to see. Sometimes people don’t understand that they get to show up as adults, they get to ask powerful questions, and they always get to choose the tonality and the behaviour of their response.
Elaine Froese previously responded to questions and comments regarding the financial, tax, and business barriers that come up during the farm transition process. Read her perspective on finances before transition here.
Editor’s note: The responses have been edited and condensed for clarity.