{"id":3285,"date":"2019-08-15T14:00:51","date_gmt":"2019-08-15T20:00:51","guid":{"rendered":"https:\/\/elainefroese.com\/?p=3285"},"modified":"2021-09-20T21:33:01","modified_gmt":"2021-09-21T05:33:01","slug":"finding-fairness-in-farm-transition","status":"publish","type":"post","link":"https:\/\/elainefroese.com\/2019\/08\/15\/finding-fairness-in-farm-transition\/","title":{"rendered":"Keeping Farm Transitions Fair"},"content":{"rendered":"<p><a href=\"https:\/\/elainefroese.com\/wp-content\/uploads\/2018\/03\/Finding-Fairness-in-Farm-Transition.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter wp-image-3295 size-medium\" src=\"https:\/\/elainefroese.com\/wp-content\/uploads\/2018\/03\/Finding-Fairness-in-Farm-Transition-710x365.jpg\" alt=\"Finding Fairness in Farm Transitions\" width=\"710\" height=\"365\" \/><\/a><\/p>\n<p>Farm transitions can be tough. And they\u2019re only tougher when there\u2019s a lack of fairness during the process.<\/p>\n<p>The daughter of BDO\u2019s Jim Snyder (now retired) thinks farm families will be more successful if they view fairness as \u201chelping everyone be successful\u201d rather than merely \u201cbeing equal\u201d.<\/p>\n<p>I\u2019ve been challenged to create a session on fairness in farm transition, and here\u2019s what kept me up at night: mulling my thoughts and experience on the topic into a practical tool for you!<\/p>\n<p>Here\u2019s what I came up with (best remembered by utilizing this acronym):<\/p>\n<h2 style=\"text-align: center;\"><span style=\"color: #80430a;\"><strong>FAIR<\/strong><\/span><br \/>\n<span style=\"color: #80430a;\"> <strong><span style=\"text-decoration: underline;\">F<\/span>inancial Transparency, <span style=\"text-decoration: underline;\">A<\/span>ttitudes, <span style=\"text-decoration: underline;\">I<\/span>ntent, <span style=\"text-decoration: underline;\">R<\/span>oles<\/strong><\/span><\/h2>\n<p>When you utilize this tool during a farm transition, it will help keep the process fair, which can ultimately result in a smoother transition.<\/p>\n<h3>Financial transparency.<\/h3>\n<p>Financial transparency is an essential part of farm transitions.<\/p>\n<p>Parents should not be silent about their desires for the future. They\u2019re encouraged to openly share the farm books, viability, and their personal wealth situation.<\/p>\n<p>Merle Good has coined the term \u201cpersonal wealth bubble.\u201d It refers to money that parents can draw income from for the 20 years after transition. They can access this money for gifting to heirs, farm, and non-farm business heirs.<\/p>\n<p>Have you sought out a financial planner to create more certainty about your future financial security? Do it.<\/p>\n<p>Debt servicing, gifting, and farm viability also fall under the financial transparency header.<\/p>\n<h4><b>Debt servicing.<\/b><\/h4>\n<p>Debt servicing is another important part of the financial transparency discussion.<\/p>\n<p>How much can the next generation really afford to service? What parts of the farm assets are you willing to gift, roll over, or have purchased?<\/p>\n<p>If you want to give an equity position to non-farm heirs, you can do that with well-written land rent agreements. Check to see if your successor wants to be in business with his or her siblings.<\/p>\n<p>Looking for more help and information on succession planning? Don\u2019t miss <a href=\"https:\/\/elainefroese.com\/articles\/no-talk-no-plan-no-succession\/\" target=\"_blank\" rel=\"noopener noreferrer\">this article.<\/a><\/p>\n<p>&nbsp;<\/p>\n<p><a href=\"https:\/\/elainefroese.com\/wp-content\/uploads\/2018\/03\/Depositphotos_62692597_m-2015.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter wp-image-3289 size-medium\" src=\"https:\/\/elainefroese.com\/wp-content\/uploads\/2018\/03\/Depositphotos_62692597_m-2015-710x474.jpg\" alt=\"Farm debt servicing\" width=\"710\" height=\"474\" \/><\/a><\/p>\n<h4>Gifting<\/h4>\n<p>Have you ever asked your adult children what they expect?<\/p>\n<p>Money does not equal love in my books, but for many it does.<\/p>\n<p>I\u2019ve seen parents fret about working to give money to less fortunate children in an unrealistic attempt to make all the kids economically equal. This is a foolish goal.<\/p>\n<p>Many young people with great educations and entrepreneurial skills can end up wealthier than their farming parents.<\/p>\n<p>Many of the young adults I have the joy of working with say things like: \u201cElaine, we just want our parents to have some fun and enjoy the fruit of their labour. We will be okay. We\u2019ll find a way to make it work.\u201d (Yes, I know you\u2019re wishing you could adopt these kids!)<\/p>\n<p>Consider the gifts of vehicles, house down payments and university degrees ($200K) that you and the farm have already facilitated&#8230;then ask yourself:<\/p>\n<p>What do you owe your children?<\/p>\n<h4><b>Farm viability.<\/b><\/h4>\n<p>Do you have a clear picture of how many families the profitability of the farm can support?<\/p>\n<p>Are you having a hard time saying no to the adult child who is seeking to return against the wishes of your current successor(s)?<\/p>\n<p>This is where operating agreements, codes of conduct and shareholder agreements are helpful tools for role expectations.<\/p>\n<p>I\u2019ve written more about evolving farm family roles, including how these roles change during a farm transition. You\u2019ll find that <a href=\"https:\/\/elainefroese.com\/farm-family-coaching\/evolving-farm-family-roles\/\" target=\"_blank\" rel=\"noopener noreferrer\">here.<\/a><\/p>\n<p>[Tweet &#8220;How #farmers can be #FAIR during #farm transition planning with everyone!&#8221;]<\/p>\n<h3>Attitudes.<\/h3>\n<p>Attitudes about money create havoc when your heirs feel that \u201clove equals money.\u201d<\/p>\n<p>You know too many sad stories about families who never speak to each other after the parents die.<\/p>\n<p>What money scripts are you carrying around? Do you have a scarcity mindset or one of abundance?<\/p>\n<p><i>(Give \u201cThe Soul of Money\u201d by Lynne Twist, \u201cWired for Wealth\u201d by Brad Klontz or \u201cMoolala\u2026why smart people do dumb things with their money\u201d by Bruce Sellery a read.)\u00a0<\/i><\/p>\n<p>I suspect that many fights are about the high value put on money and land, and a lack of forgiveness or grace to allow parents to make their own choices.<\/p>\n<p>My experience with estates has been interesting when the main goal is to have richness in relationships and not worry about the size of the inheritance, if there even is one.<\/p>\n<p><a href=\"https:\/\/elainefroese.com\/wp-content\/uploads\/2018\/03\/transition-talk-Build-Your-Tribe-of-Support.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter wp-image-3290 size-medium\" src=\"https:\/\/elainefroese.com\/wp-content\/uploads\/2018\/03\/transition-talk-Build-Your-Tribe-of-Support-710x473.jpg\" alt=\"Attitudes matter on the farm\" width=\"710\" height=\"473\" \/><\/a><\/p>\n<p>So, Bruce Sellery\u2019s penetrating question is, \u201cWhat does money mean to you?\u201d<\/p>\n<p>Spend some time over coffee talking about it with your spouse and your adult heirs.<\/p>\n<p><b>What we believe, our values, and cherished beliefs will drive our behaviour.\u00a0<\/b><\/p>\n<p>If someone is secretive about their plans to be fair, think about open-ended questions that you can draw them out with.<\/p>\n<p><i>\u201cWhat does fairness look like to you?\u201d\u00a0<\/i><\/p>\n<p>Listen carefully to their concerns.<\/p>\n<p>Many folks have been \u201cburned\u201d by their family of origin experiences, and there is usually some history or a back-story that is driving their decision making.<\/p>\n<p>Ask, \u201cHow did you get the farm from your family?\u201d<\/p>\n<p>Be curious about women who maybe did not get much compared to their siblings.<\/p>\n<h3>Intent.<\/h3>\n<p>Intent is another key tool for conflict resolution with farm transitions.<\/p>\n<p>As <a href=\"https:\/\/elainefroese.com\/farm-family-coaching\/\" target=\"_blank\" rel=\"noopener noreferrer\">mediators and conflict resolution communicators<\/a>, we work hard to find out what each person\u2019s intent is, as well as what they truly desire.<\/p>\n<p>In the case of farm transitions, there are many players with various needs: the founders, the successors, the non-farm heirs, sibling groups, in-laws, and extended family or grandparents.<\/p>\n<p>As you can see, there are a lot of players to consider in the family dynamic web.<\/p>\n<p>Work hard to be clear on your intent, and then listen for what effect that has on the other party.<\/p>\n<p>In my case, I was clear with my parents that I did not expect a large sum of money from their estates, as they needed their finances to focus on the farm\u2019s financial success.<\/p>\n<p>My intent was to have their love, as well as time for my family\u2014as much as they were able to give while they were alive. We spoke about this openly at a family meeting facilitated at their accountant\u2019s boardroom.<\/p>\n<p>My mother died a short 6 weeks later.<\/p>\n<p><a href=\"https:\/\/elainefroese.com\/wp-content\/uploads\/2018\/03\/transition-talk.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter wp-image-3291 size-medium\" src=\"https:\/\/elainefroese.com\/wp-content\/uploads\/2018\/03\/transition-talk-710x463.jpg\" alt=\"farming father and son\" width=\"710\" height=\"463\" \/><\/a><\/p>\n<p>If parents don\u2019t agree on their intentions for the fair distribution of assets or gifts, or they fight about what fairness is, then the task is to work with the founder\u2019s vision first.<\/p>\n<h3>Roles.<\/h3>\n<p>Role expectations about what a good day on the farm looks like for dad and mom, and when the successor can be the main manager with control, are also fairness discussions.<\/p>\n<p>Is it fair for an eighty-year-old to still hold the majority of ownership and control? Is it fair for his sixty-year-old child not to have power? Or the grandparent\u2019s 35-year-old employee\/grand-child to not have a concrete equity position?<\/p>\n<p>What do you want your legacy to be? Start figuring out what fairness in farm transition looks like to you. Then act!<\/p>\n<p>Would you like more help securing your farming relationships and handling farm transitions? Contact me today to learn about my <a href=\"https:\/\/elainefroese.com\/farm-succession-planning\/\" target=\"_blank\" rel=\"noopener noreferrer\">farm succession planning<\/a> and <a href=\"https:\/\/elainefroese.com\/farm-family-coaching\/\" target=\"_blank\" rel=\"noopener noreferrer\">farm family coaching<\/a>!<\/p>\n<p>If you enjoyed this article\u00a0 and you\u2019d like to dive deeper, don\u2019t miss these posts:<\/p>\n<p><a href=\"https:\/\/elainefroese.com\/farming-business\/5-ways-of-dealing-with-conflict-on-the-farm\/\" target=\"_blank\" rel=\"noopener noreferrer\">The 5 Ways of Dealing With Conflict on the Farm<\/a><br \/>\n<a href=\"https:\/\/elainefroese.com\/farm-family-coaching\/communicate-to-generations-on-the-farm\/\" target=\"_blank\" rel=\"noopener noreferrer\">How to Communicate To the Different Generations on the Farm<\/a><br \/>\n<a href=\"https:\/\/elainefroese.com\/farming-business\/10-things-millennial-farmers-want\/\" target=\"_blank\" rel=\"noopener noreferrer\">10 Things Millenial Farmers Want<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Farm transitions can be tough. And they\u2019re only tougher when there\u2019s a lack of fairness during the process. The daughter of BDO\u2019s Jim Snyder (now retired) thinks farm families will be more successful if they view fairness as \u201chelping everyone be successful\u201d rather than merely \u201cbeing equal\u201d. I\u2019ve been challenged to create a session on&hellip;<\/p>\n","protected":false},"author":2,"featured_media":4896,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","footnotes":""},"categories":[],"tags":[837,838,839,840,762,841,202,842],"class_list":["post-3285","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","tag-fairness","tag-fairness-in-farm-transition","tag-fairness-on-succession","tag-farm-coaching","tag-farm-transition","tag-find-fairness-on-the-farm","tag-succession","tag-transition"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v26.9 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Keeping Farm Transitions Fair - Elaine Froese | Canada\u2019s Farm Whisperer | Your go-to expert for farm families who want better communication and conflict resolution to secure a successful farm transition<\/title>\n<meta name=\"description\" content=\"When it comes to planning farm transitions, many families find complete fairness to be difficult with farm and non-farming children. 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