Fair Isn't Always Equal: Managing Expectations in Farm Succession

Photo by Gregory Hayes on Unsplash 

One of the most challenging aspects of farm succession planning is balancing the expectations of family members. Parents often want to treat their children fairly, but determining what is fair can be far more complex than simply dividing assets equally.

In many farming families, one child may have spent years working on the farm, often accepting lower income and investing significant time and effort into building the business. Other children may have pursued careers elsewhere and established their own financial independence.

When the farm represents the majority of the family's wealth, dividing assets equally may not be practical. Splitting farming land or business assets can affect the viability of the enterprise and may make it difficult for the next generation to continue operating successfully.

This is why the concept of fairness is often more important than equality in succession planning. A successful plan considers the contributions, circumstances and future needs of each family member while also protecting the ongoing operation of the farming business.

Open communication is critical. Many disputes arise not because of the decisions that are made, but because family members are surprised by those decisions after a parent passes away. Early discussions can help manage expectations and provide an opportunity for everyone to understand the reasoning behind a proposed succession plan.

It is also important that succession planning is documented correctly. Wills, ownership structures, shareholder agreements, partnership arrangements and powers of attorney should all work together to support the family's long-term objectives.

No two farming families are the same, and there is rarely a perfect solution. However, a carefully considered succession plan can significantly reduce the risk of conflict and provide confidence about the future.

The best time to begin discussing succession is usually earlier than you think. The longer these conversations are delayed, the fewer options may be available.

“Liability limited by a Scheme approved under the Professional Standards Legislation. This article does not constitute legal advice and provides general information only.”