What questions should we be asking 3
Asking for financials before succession planning.
When Tom’s* dad asked him to take over the family farm he was excited. Wisely, Tom asked to see the financials. The answer was a firm “no” which was a little rude and very confusing for Tom considering that the knowledge of the financials of the business was fundamental in the decision-making process. No person can take – ‘Dad said I could have the farm but I do not know his financial situation’ to the bank.
Wendy’s* story is similar. As the daughter in law on the farm, her husband and his family did not see a reason or value in including her in the decision-making process, even though every decision that was made directly impacted her life and her financial well-being. She had a right and an obligation to be included so she could plan and budget for her responsibilities accordingly.
If the potential successor cannot be provided correct and historical financial information for the farming operation then there is no succession plan. There may be succession drama, which differs greatly from transparent and honest conversations in a succession plan that is geared toward a fair and just transition for all parties, including those that are not blood relatives – such as the daughter in law. If an interested or named party is not privilege to the farm financials even when they live on the farm, thier future is at risk.
Before getting into the details of transfer of succession, ask for the financials so your family has the opportunity to consider the risks and opportunities. Among the hundreds of questions to ask in the process – this is the first and likely the most important. That information today – effects the rest of the next generations life.
What have you been promised?
All too often, a farm owner makes a succession promise, to several children or even grandchildren. Terry* was promised a lot of things over his five decades of being on the family farm. He finally simply walked away with his hat, his family and a few cows. A promise is not a commitment, until it is on paper. And as much as any generation can be blinded by love or trust, these multiple promises do not become a reality. It is important to ask the tough questions like: What have you promised? To whom? Do you think that is fair? Are you willing to put that in writing?
The clock is ticking…..
Time goes so quickly. Often a generation is promised some or all of the farm- without a timeline – just as we read had happened to Terry*. A firm commitment in writing is only half the discussion – the other is the timeline in which the events will occur.
Adults are living longer and are active in business well into their seventies and beyond. To put this in the first person – If you are 20 or if you are 50 year of age and are waiting – you’ve got to know what you are waiting for. You may have to make other choices. Deaths too, often occur without any direction in place. Promises are not agreements. If you have not been privy to the financials and a committed timeline with everything in writing, regardless of your age and stage in the process, then the hard truth is that your efforts likely have generously provided free labor and most certainly the successor is living on a hope and dream.
@Brenda Lee Schoepp (2026)
*Names are changed