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Studies have shown that fewer than 20 percent of farm families
have an effective estate plan to roadmap what happens to the
family farm when dad and mom retire or pass away. Death is
inevitable. What is very normal is that families avoid talking
about what is unavoidable.
Stop Avoiding Talking About Your Death
Make your best effort to devise a farm estate plan to minimize
the damage to the family members due to an inadequate or
incomplete estate plan. Poor or no planning at all can lead to
deep scars that may last forever. Such damage is something that
parents, as farm owners, should strive relentlessly to prevent.
The primary reason for the lack of estate planning is avoidance.
Avoiding difficult discussions does not mean that the
difficulties of the task will go away. Both death and
accumulated wealth are complicated, complex subjects to discuss.
Even more challenging is discussing your desires for the farm's
future and anticipating how your family members as heirs will
react to what you want to happen after you are gone.
All Families Have Dysfunction in Estate Planning
Most families have complex and challenging issues, and this is
normal. Having communication struggles doesn’t mean family
relationships are bad; it just means the task is complex. Even
families with normal communication abilities can greatly
struggle with farm estate planning. Even the best communicating
families may have dysfunctional roles within the family unit,
and these roles become more obvious when discussing the farm's
future.
Family members can take on several different dysfunctional roles
in trying to piece together their ideas on what should happen to
the farm after the last living parent dies. Avoiding the
discussion of the plan does not make the issues go away. Careful
planning makes the struggles less painful.
In addition to creating a good plan, the dysfunctional roles
(referring to the estate plan) should be identified to address
problems. There are names for these roles that family members
assume. These roles are the Lost Child, the Golden Child, the
Caretaker, the Dominator/Bully, the Enabler, the Scapegoat, the
Clown, and the Hero. Most parents can identify these roles in
the family with some thought or with a counselor's assistance.
Parents can rest assured that their children know who plays what
roles.
Developing and Finishing the Plan
Not having a plan can cause irreparable damage to family
relationships. In addition, there are potentially significant
tax expense consequences, which can motivate families to
understand the need for a plan, but completing the plan usually
does not get done. The first and most challenging hurdle to
overcome is starting a plan, and the second most difficult is
finishing the plan. Below are some quick tips to consider when
creating a farm estate plan.
Quick Tips for Farm Estate Planning
Parents, make sure that you are showing a unified approach to
your children as heirs. Make sure that you agree with each other
before you meet with your heirs.
Get the estate plans done while you both are still living and
mentally fit.
Develop a trustworthy and competent team of planning advisors,
including an attorney, an estate plan advisor, an accountant,
and a trusted counselor/therapist. They will help you sort out
family issues and emotions. The counselor can help you sort out
your anxiety over the matter, which can lead to avoidance
issues.
Consider the family dynamic by asking family members what they
are thinking. Often, the lost child will say, “I do not care
what happens with the farm,” when, in fact, they do but struggle
to say it. Others might be afraid of the dominator, and so on.
Do not accept simple, short answers. Find out what they are
thinking and let everyone be heard.
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Consider very carefully who you choose
as the executor/trustee. A hired executor may well be worth the
cost.
Understand that keeping a farm trust flowing over multiple
generations is very challenging. Fully understand that you cannot
rule from the grave for very long without creating family struggles.
Carefully assess the abilities of the family member(s) chosen to
operate the farm. They must be able to manage the full array of
duties required, which may require training. Professional and
practical communication skills are imperative when dealing with
other heirs.
Make a realistic decision about whether the farm will be financially
viable in the coming years. Seek advice, as ending the direct family
farm operation might be the best choice.
Accept that it is almost impossible to be completely equal in
dividing a farm operation.
Discuss your final plans. Make sure all main assets are known to all
family members.
All significant discussions, including changes, should be held as a
family meeting.
Simultaneously, every family member should receive copies of all
legal documents for the estate plan.
There is a whole lot more that goes into developing estate plans.
This quick guide is a starting point for estate plan considerations.
For more information, please contact Kevin Brooks at kwbrooks@illinois.edu
and visit
https://extension.illinois.edu/fmpt/farm-succession.
About Extension
University of Illinois Extension develops educational programs,
extends knowledge, and builds partnerships to support people,
communities, and their environments as part of the state's
land-grant institution. Extension serves as the leading public
outreach effort for University of Illinois Urbana-Champaign and the
College of Agricultural, Consumer and Environmental Sciences in all
102 Illinois counties through a network of 27 multi-county units and
over 700 staff statewide. Extension’s mission is responsive to eight
strategic priorities — community, economy, environment, food and
agriculture, health, partnerships, technology and discovery, and
workforce excellence — that are served through six program areas —
4-H youth development, agriculture and agribusiness, community and
economic development, family and consumer science, integrated health
disparities, and natural resources, environment, and energy.
COLLEGE OF AGRICULTURAL,
CONSUMER & ENVIRONMENTAL SCIENCES
University of Illinois | U.S. Department of Agriculture | Local
Extension Councils Cooperating University of Illinois Extension
provides equal opportunities in programs and employment. If you need
a reasonable accommodation to attend, call the registration office.
Issued in furtherance of Cooperative Extension work, Acts of May 8,
and June 30, 1914, in cooperation with the US Department of
Agriculture by the Director, Cooperative Extension Service, and
University of Illinois.
[Kevin Brooks, University of Illinois
Extension Farm Business Management and Marketing Educator]
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