Common Roadblocks That Can Derail Succession Planning

There are three primary roadblocks that have the potential to derail farm succession plans – we know this because we’ve seen it happen before. Understanding these roadblocks will help you prevent derailment in your own farm succession planning. Let’s explore them now, so that you’re well prepared in your plans.

Roadblock 1: Lack of communication

We’ve discussed the importance of communication in previous blogs, and we can’t emphasize enough just how important effective communication is.

Communication needs to happen on two levels. The parents need to communicate with the children, and the children need to communicate with the parents. When either of those fail, the strength of the succession plan is put in jeopardy.

The risk to these transitions when communications fail is significant:

  • Not maximizing values
    When not structured properly, or when changed at the eleventh hour, the risk to most plans is that value will be lost. That loss of value can happen for several reasons such as: poor planning of tax minimization, the farm needs to be sold at the last minute to a new bidder, or appropriate funding cannot be procured.
  • Succession not happening the way you want it
    A successful transition may include the current generation working side-by-side with the new generation. While this may be a strong desire from the parents’ perspective, if the children have different intentions that were never discussed, this can create animosity and ultimately destroy the family union. The opposite may also be true— children may have assumed that the parents would continue to support the operations when in fact the parents have decided to fully retire. 
  • Damage to family relationships
    As the above examples show, ultimately, the damage from lack of communication can often manifest itself in family disharmony. When speaking to many farmers about the importance of providing for their children, it becomes abundantly clear that for many, family is very important.

As Jaclyn Cairns, Senior Tax Manager at Grant Thornton likes to quote, “you still want you to be able to sit down for Christmas dinner after the transition is done.”


Mom and dad transfer their farm to their two sons. The sons are expected to manage the farm together because it is the wish of the parents to have them work side by side on the family farm. However, this may not be the best solution and forcing them to work together may be detrimental, especially if the sons have different visions, different strengths, or different work life balance wants or needs. Expecting them to work on the same farm together might be challenging.

A better approach may have been to separate one farm company into two companies and allow them both to run their own distinct farm operation.

While it is possible to separate down the road, it could be too late. Hurt feelings can be a barrier and sometimes cause irreparable damage between children, creating animosity and an inability to work together even in dividing the farm.

One of the best solutions that we have found is to start conversations early in the transition. Not just with the parents but also with the children separately. Creating a neutral safe space for conversation allows advisors to bring out all wants, fears, strengths and weaknesses of the individuals and the transition plan itself.  Professional advisors who understand the farm landscape can ask “what if” questions that can help individuals think through many scenarios. The key to these conversations is to have them while there is still harmony. To start when no one is trusting one another or willing to share makes it much more difficult to navigate solutions.

In some family successions, it may not be possible to keep the farm in the family. For example, it is prudent to explore questions like how health or marital issues potentially affect the transition. If the farm is earmarked for one child and that child passes away, should the farm go to their spouse or be divided among the remaining siblings?

Roadblock 2: Bury your head in the sand strategy

A do-nothing approach or kicking the can down the road, is not a good strategy. For many individuals, the thought of tackling these discussions and the transition is overwhelming, so rather than start, many will delay to a future date. Sometimes, a Will was established early on in a marriage and the hope is that the Will protects the farm should anything happen. However, the farm has likely evolved significantly, tax rules may have changed, and your family dynamics have likely altered. Waiting or relying on outdated documents to start this process is a flawed strategy that will ultimately lead to disappointing results.  If unsure where to start, speak to a professional who focusses on farm successions.

Roadblock 3: Thinking that the tax plan is the answer

When speaking to farmers for the first time, we are often asked for the ideal transition plan.  Unfortunately, there is no one-size-fits-all plan: farm and family dynamics are unique. The transition and the plan should be customized to each distinct situation. There are of course common tax planning techniques and approaches that should be entertained, but the tax plan itself is not the starting point. In other words, you should not walk into your accountant’s office and assume they will be able to pull the ideal transition for you and your farm off the shelf. 

Rules for farmers are fairly flexible from a tax perspective.  This allows most farm successions to put plans in place that fits their individual situation. The tax plan can then be overlayed to make sure that it is done in the most tax efficient way. The hard conversations, hurt feelings and the emotions cannot be solved by tax planning.

For most farmers, they want to maximize values, minimize taxes, and have transitions done their way.  While avoiding some of these common roadblocks will not guarantee success, they will certainly increase the probability of accomplishing these goals.

Interested in Farm Succession Planning? Follow along as David Szalkai, our Insurance & Estate Planning Advisor, discusses a variety of different topics related to Farm Succession in our new video series.

Access the complete series here.

Tall Oak Private Wealth is committed to helping you and your family no matter what stage you are at in succession planning.  Reach out to us today and see how we can help turn your plan into reality.

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