Four-time Super Bowl head coach Marv Levy of the Buffalo Bills once told me, “Preparation is the best defense against regret.”
He wasn’t saying the Bills weren’t prepared for their four consecutive Super Bowl losses in the 1990, ’91, ’92 and ’93 seasons as much as pointing out a roadmap for success is easier to create after defeat.
I think of his words often as my world revolves around preparing for inevitable change — the kind of change that brings with it a high probability of strife.
There are families that will be on both ends of the spectrum in estate transition, but the majority will be in the middle.
Some families will get along no matter how complete or incomplete their farm transition plan was thought through, while other families will be in conflict in spite of the level of communication and attention given in preparation of their estate intentions.
The opportunity for the future of agriculture in small towns throughout the Midwest is to work with those families in the middle with thoughtful planning, effective communication and continual review of their estate and transition plans.
The transition of the family farm is not a black and white issue. There is no textbook answer to the possible outcomes that could arise for each unique family.
During harvest, timing can play a significant role in our daily routine.
It’s not harvest without the hindsight reality of your grain marketing plan. How would you feel about marketing if you would have timed your corn sales for the July 12 cash price of $3.80 instead of this morning’s $2.91?
Hauling grain is another example. Pulling into the grain line at your destination before the five other semis that inevitably show up at the same time is always a welcome timing victory.
Harvest coincides with the daily coin-flip possibility of the deer that shoots in front of your vehicle or decides to stay in the ditch as you drive by.
Each of these events can leave us with “that was a close call” or “what if the timing of that was different” feeling?
Farm transition planning can be about timing as well.
This week alone, we received two calls of the passing of a farmer whose plans we had worked on and stumbled upon a third obituary by chance in the paper.
A quick story that can tie all this timing and preparation talk together for you came from an extremely nice retired farm widow who now resides in a sunshine state. She is nearly three digits old and has land in a farm corporation.
She knows exactly who should inherit her land, and in fact has it spelled out in her will. The problem is her will doesn’t control the assets inside the corporation (in this case farmland). Whoever inherits the corporation would control that by a vote.
The key point to understand is that there are specific bequests and there are residuary bequests. Specific bequests come “off the top” so to speak. The residuary of an estate is “everything else” that isn’t specifically bequeathed.
The land, in this case, was listed as a specific bequest to two “heirs.” The residuary or “everything else” is to go to three different “heirs.”
The timing issue here is how can you get the land out of the corporation to allow the estate plan to be carried out by the will without triggering tax or unintended consequences?
Will the two “heirs” receive the land or will the three “heirs” receive the corporation with the land in it as a part of the residuary?
There are families that could be on both ends of the spectrum if this set of facts were to be presented to them.
Some families will get along and work through the intent of the plan no matter how complete or incomplete the distribution plan was thought through.
Other families will fight in spite of the level of communication and attention given to planning intentions.
The opportunity for this incredibly well-intended corporation owner is to work with her planning team of her attorney, accountant, executor and trustees as well as all her heirs to “lock down” her intended plan.
Timing issues like the liquidation of a corporation before or after her death could swing inherited values one way or another. At best this could lead to confused and upset heirs and, at worst, a lawsuit.
Nothing will test the mettle of a family more than a shared inheritance. The best you can do is prepare, plan, communicate and wait a few years and prepare, plan and communicate again, and wait a few years and do it all over again.
My hope is that you will have adequate time to prepare for the transition of your life’s work in a manner that accomplishes your goals but also reduces the risk of regret amongst your heirs.
For 25 years, Steve Bohr has been a partner in the farm continuation firm of Farm Financial Strategies, Inc. For additional information on farm continuation issues or if you have a question please contact Steve via email at Bohr@FarmEstate.com or by phone at 1-800-375-4180.