Schoepp: When it comes to succession, things can so easily go terribly wrong

farm couple

When the transfer of the farm goes off the rails, the hurt and hardship never really go away

This is a factual case study of succession gone wrong — and the hurt and hardship it created for the families on three farms.

The farms and farm families are extraordinarily similar. The families are well-known and respected leaders in the community. The fathers are revered men who were hard-working and dominate in their homes. The mothers live in servitude and all the now-adult children who still live in the community are capable of running a farm.

Growing up, the children committed equally to the farming enterprise and the farms grew to be of significance. During the years of growth when the children were deciding on career paths, the farms were not considered for sale nor was there any indication of the parents opting out.

Communication in regards to succession was completely absent and any attempt for discussion was not welcomed by the parents. There was an assumption by the siblings that at some point the estate would be divided equally. They all contributed and gave their younger career years to the success of the parents’ farm.

And then it happened.

On all three farms, the parents transferred the entire farm, including all capital and non-capital assets to one child. They also signed over insurance policies and cash and became renters of their own home. There was no precluding discussion and to this day, the parents will not discuss the transfer. There is not any indication of residue in the estate for the siblings.

One family is angry, broken and does not communicate. This family is seriously divided and the siblings no longer are ever in the same room nor do they go back to visit the parents. The only time they are together is in court.

The siblings in the second family remain in shocked and shamed silence, and the siblings in the third suffered deep humiliation, loss and severe depression.

Irreversible intergenerational damage was imposed by all sets of parents. The one set of siblings are firm that they are forever divided. The second set of siblings is quiet in their humiliation. The third family farm was lost under the care of the recipient.

In these families, the siblings have expressed anger, hurt, humiliation, embarrassment, depression, sorrow, pain and sadness. While recognizing the parents had the right to do as they chose with their assets, they feel very confused with the secrecy and they feel less worthy as children. In all three families, the remaining siblings found out by accident and after the fact. They shared that they no longer fully trust the parents, particularly the dominating father. The parents have yet to discuss their decision.

The siblings in family one are determined to fight. They are asking for a piece of the family farm in cash, however small. Their hurt is visible and raw. The second set of siblings has repressed their feelings and continues to work and play together. There is no farm left to fight for in the third family and everyone has lost their home.

Most succession messes gravitate around love, land, power or money: which one of these do you think exemplifies this case study of three farms?

Was one child loved more than the others in each family unit? Was this a power trip — an exchange that sends a strong message to daughters and also to younger sons? Elder abuse is a consideration. Was there manipulation by the recipient adult child? Was this a desperate attempt to leave land in the family? Is this about cowardice or lack of information? Was this parental power over the recipient child to get the desired heir thus avoiding discussion on family equity?

Ironically, the secret transaction of the farm to one child without consideration of the others failed.

One farm is gone and in the other two, neither recipient adult, now both of retirement age, will discuss succession with their children nor are those third-generation children interested in farming. The behaviour of the parents has become intergenerational, perhaps because the adult who was secretly gifted the farm has not experienced emotional and economical harm.

What do we learn from this succession story?

Children are persons. Having a child or adopting a child comes with a responsibility focused on love and equitable treatment at all times. Parents should recognize the gifts each child brings into their lives and strive for the excellence of everyone in the family, regardless of gender. It is important to recognize the contribution of children to the farm through financial planning and award shares or dividends.

And parents, must at all times — regardless of how difficult the dynamic — be transparent, fair, realistic and talk about the plans for the future. At some point, this is a taxable transaction and it may be the surviving spouse or siblings paying that bill. If stakeholders are unsure, good advice is available.

The runway for succession is long and complicated. Gifting or transferring the entire estate or all the current equity to one child without discussion and recognition of the others is not a reasonable option.

About the author

AF Columnist

Brenda Schoepp

Brenda Schoepp works as an international mentor and motivational speaker. She can be contacted through her website at www.brendaschoepp.com. All rights reserved.

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