Transferring the ranch: Generational transfers remain top priority for farm, ranch families
Casper – As the average age of farmers and ranchers across the U.S. remains relatively high, transferring the operation from one generation to the next is important, and the Wyoming Stock Growers Association (WSGA) continued to emphasize transition planning during their 2015 Winter Roundup this year.
“Transition of our properties is one of the most important things we can do,” said Joe Nield, WSGA Region IV vice president. “It is always ongoing.”
A panel including Planck Stewardship Initiative’s John Heyneman, former Governor Mike Sullivan and attorney Kim Cannon of David and Cannon, LLP looked at the dangers of neglecting estate planning during the opening general session of the event on Dec. 1.
“We have faced the horror stories when it comes to what happens on a ranch that hasn’t planned well enough,” Sullivan said. “There are certain lessons we have learned that I think can be helpful, particularly to the younger agricultural entrepreneurs here.”
The issues behind estate planning are longstanding, and Sullivan added that disputes over land, in particular, can dissolve family relationships quickly.
Cannon, who has litigated in many cases where families were in turmoil over estates, commented, “Estate planning cases are always tragic because they pit brothers and sisters against one another. It destroys the very thing that their parents worked hard to build and maintain.”
History of the ranch
Cannon also noted that he has seen a pattern emerge lately that is discouraging.
“The generation of people born between 1915 and 1930, all of whom experienced the Great Depression and went through World War II, built up their families on those ranches. That was very significant to them,” he explained. “The children learned the skills of the ranch, the country it existed in and the value their parents held for the ranch.”
Later, the children went to college and only one or two of the often large families stayed on the ranch.
“There isn’t enough room for the rest, so they pursue careers in a variety of things, many far-flung across the country,” Cannon continued. “When they get to their late 50s and early 60s, they start to think about retirement, which coincides with their parents passing on.”
One attractive retirement option is moving back to the family ranch, which holds fond childhood memories. Cannon noted that intractable conflicts often arise between those people who made their life on the ranch and those who want to move back.
“The only way to prevent this requires a level of communication, exchange, understanding and clarity from the older generation and discussion by the younger generation, as well as acceptance of responsibilities. That is hard to achieve,” Cannon said. “This is the kind of planning that we think is worth the time to give thought to.”
“The first step, as we look at estate planning, is to recognize that every family is different,” Cannon commented.
Next, Cannon noted that it is important to discern who is important in the discussion, including in-laws and other non-lineal family members.
“The third thing is family culture,” he continued. “Can the family communicate and make decisions? How much family democracy can the family stand?”
Depending on the dynamics of the family, an outside mediator may provide benefits, Cannon said.
The economics of the ranch are an additional point to consider, he added.
“A lot of people say this isn’t fun,” Cannon said. “It’s hard work, but it has to be done to make succession successful – for the next generation and to preserve the family legacy the family truly wants.”
Starting the process
“Some of these horror stories that we hear are new, and some aren’t,” said Heyneman. “We all probably have other examples that pale in comparison, but the important thing is that we plan.”
Heyneman further noted that the issues aren’t unique to agriculture, and the issues are challenging.
“It is difficult to make the transition financially, legally and emotionally,” he added. “Succession is a very researched topic, and there is a wealth of information out there. It isn’t new.”
He continued, “There are resources out there to help families begin, but if we don’t start the conversation, it will never happen.”
Saige Albert is managing editor of the Wyoming Livestock Roundup and can be reached at email@example.com.