Written By: Leah Chester-Davis, Mark Robertson, Tom Haarmann
Consider this alarming fact: most farms usually don’t survive to the next generation because of an inadequate job of planning.
The good news is that there are a number of tools and resources in place. Consider Carolina Farm Credit and its Money Concepts Services as a place to turn for help to get you started with a plan that works for you and your family.
Tom Haarmann, Money Concepts financial services manager with Carolina Farm Credit, urges farm families to take the time to sit down and talk about what they want for the family business. “Often a trusted advisor can help guide families through these tough discussions,” says Haarmann. “The key is to make a general outline as a start.”
Haarmann says one of the most difficult things to witness is families discussing plans but then never putting their plans in writing. “Sometimes the older generation doesn’t want to reveal any of the secrets. They don’t want to turn over the books. But it’s better for the younger generation to know upfront. It also helps for the family to work together to develop a plan.
Sadly, when someone dies without a plan in place, it’s often difficult for the family to make decisions due to requirements of the law. “Without a will or a legal plan, it goes into the North Carolina Statutes of Intestate. What that means is that the statutes are going to dictate what happens,” explains Haarmann.
This can be particularly jarring when families may have made farm purchases together or when different family members recall different promises that parents may have made. “Regardless of what promises have been made, if it’s not in writing the North Carolina statutes are going to kick in and decide what happens to the land, the cattle, the equipment,” says Haarmann. “I’ve seen it tear families apart.”
While crucial conversations can be daunting, they need not be. Haarmann advises setting aside a day to get the ball rolling to determine what the goal is for the family farm. Then seek out the experts – estate attorney, CPA, financial planner, insurance agent – who can help develop the plan and put it in writing. Consider it an investment well spent for peace of mind and for protecting your farm and family.
“If you’re seeing a financial planner or a CPA on a regular basis, make it part of a yearly check-in to review the plan, make sure it’s up-to-date and make sure it’s still what you want to do,” he advises.
For more information on transition planning, see parts 1 and 2 of “Transition Planning to Safeguard Your Farm and Family.” Also see “Every Farm Needs a Safety Net” in the fall issue of The Leader.