Hanson emphasizes relationships in estate planning efforts
Casper – Succession planning continues to be a key issue facing many farm and ranch families in Wyoming, and Ron Hanson, agriculture economics professor at the University of Nebraska, addressed the importance of maintaining family relationships while planning generational transfer of farms and ranches during the 20th Annual Wyoming Women’s Ag Symposium, held Nov. 21-22.
“It is extremely difficult to talk about family succession, passing on a farm, ranch or business from one generation to the next,” said Hanson. “No one ever wants to talk about, ‘What if?’”
Because no one wants to talk about the time when there will be an empty chair at the dinner table, Hanson noted that too often, succession plans are left undone.
“If something happened today, does everyone understand what will happen tomorrow?” he asked. “Most of the time, these things are unexpected.”
Living longer
Having discussions about estate planning and ranch succession are increasingly important to ensure everyone’s wishes are considered in passing the ranch.
“As of the year 2013, wives outlive their husbands an average of nine years,” said Hanson. “If families haven’t talked about passing on the ranch, the burden, emotion and stress will fall on the wife’s shoulders.”
Relationships
In having the discussions about what will happen to the ranch on the death of a family member, Hanson emphasized the importance of trust, communication and maintaining strong relationships.
“We talk about family all the time, but who is really included?” asked Hanson. “Who are the real members of the family? Is it only the blood-related members or are in-laws involved? Who helps make decisions, and do in-laws have a chance for ownership?”
These questions, he said, are important and need to be answered.
“Most parents biggest fear is, ‘If we bring the daughter-in-law in and turn over land and cattle, what happens if we see divorce?’” said Hanson. “Most parents figure the less the daughter-in-law knows, the better. Everything is one big secret, many times with the in-laws excluded.”
As people are excluded, Hanson noted that tension builds, suspicions form, and trust is lost.
“When doubt is created, families lose trust,” he said. “Once a family loses trust, there will no longer be respect or communication.”
At that point, the alienated member of the family becomes a liability in keeping the ranch together.
“If the son is tragically killed in an accident after he has been there for 20 years, a large share of the land, cattle and equipment are in his name and are passed on to his wife – the daughter-in-law,” Hanson said. “Would the daughter-in-law still be a part of the ranch family without the son?”
A tragic accident without a succession plan could lead to uncomfortable discussions, including how to deal with in-laws and non-farming children.
Fairness and equality
“As mom and dad work through the succession plan, the issue of non-ranching children also comes into play,” Hanson continued. “Are parents willing to treat all the children fairly and equitably?”
Hanson emphasized that each child should be treated fairly.
“It does not matter if they are sons or daughters, ranching or non-ranching,” Hanson said. “They are family, and they are children. The only issue is fairness.”
“Mom and dad should block out personal feelings when they come up with a succession plan,” he continued. “There are favorites, and mom’s favorite is likely different than dad’s. The key is to discuss the succession plan without pressure or emotional stress.”
At the end of the day, Hanson mentioned, “All the children – ranching and non-ranching, sons and daughters, it makes no difference – deserve a chance and opportunity to share in the estate and inheritance.”
Fairness, he said, it important.
Children’s perspective
“Should children always respect the decisions made by their parents?” asked Hanson.
Hanson noted that the discussion is one he has with most of his students.
“Every year, I teach my students that mom and dad owe them nothing. They don’t owe their children a farm, and they don’t owe their children a ranch,” he said.
“College students today think they are entitled,” Hanson continued. “Kids from the 1990s have never been without, and that has not necessarily been good.”
Succession plans
Hanson further emphasized that to write a succession plan, people must admit they won’t live forever.
“The obstacle in writing a succession plan is admitting that someday, we will die,” he continued. “There are farmers out there who think they are going to live for forever.”
While no one likes talking about death, Hanson noted that it is necessary to effectively write a succession plan.
“Talking about succession planning means talking about life changes,” he said. “It is easier to pretend it won’t happen than it is to give up the control or share ownership. Planning requires open discussions and no more secrets.”
Lastly, Hanson commented that no one likes a surprise, especially when it comes in the estate or the family will.
“Time never solves the problem,” Hanson said. “Deal with the issues now.”
Saige Albert is managing editor of the Wyoming Livestock Roundup and can be reached at saige@wylr.net.
