Estate Planning is Goal Setting!

Written by Michael Baron on . Posted in General Estate Planning

Dear Michael:

We have been talking for years about what we want to put into an estate plan. Our son has been working with us, but he fears he will take on too much debt if he starts taking over our livestock and machinery operation. Even though he is the logical choice, he seems hesitant about what to do in taking on some of this risk. In our day, we didn’t have the choice of being hesitant – it was kind of thrust upon us whether we liked it or not and we had to go through a lot of tough years. Now, we can’t seem to put our plan together because we just can’t tell what he is thinking. What should we do? No Mind-Reader

Dear No Mind-Reader: I can think of a few basic reasons why your son hasn’t jumped into the farm operation with two feet. Maybe he is dealing with someone in the upper echelon management (Dad and Mom) who is a bit too overbearing and he doesn’t want to upset the applecart and live a life of disappointing his parent(s). Or, maybe he just doesn’t have the aggressive gene.

If it’s the first thing, whoever in upper management who is not listening, or shutting off ideas before he gets started, ought to learn to let him make a few mistakes.

Oftentimes, parents are overeducated on the right and wrong way to do things – those who’ve been through the school of hard knocks. Or, maybe they are parents who don’t want their children to go through the same school of hard knocks the way they did.

No one out there worth his or her salt has ever made one hundred percent correct decisions throughout their agri-business career. Everyone’s gambled, lost and then gambled again and won in small business. That is small business. Being good and being bad at small business is a thing he needs to experience for himself. He has to know one thing: Good times and bad times have one thing in common – neither one last forever.

If you’ve been preventing him from making some small decisions, let him go and give it a try. Now is a good time to try a few things and if he fails, he fails. The lesson learned isn’t whether or not he succeeded or failed – it’s that he can fail, pull himself up out of the mess and he can go on. If you’re not getting knocked on your butt once in a while in small business, you’re failing.

If he won’t make decisions, you’re going to have to be brave enough to toss him into the deep end of the pool and let him sink or swim – on a small scale, of course. You’re going to have to force him to make some decisions (take on this field and plant what you want, buy these cows, etc.)

If he absolutely won’t do it, remember five percent of the people make up the leaders and the other ninety-five percent are followers. You can’t leave a farm operation to a ‘follower’ and expect it to succeed. If he just won’t go, maybe you saddled up the wrong pony to take over?

The other reason I find a lot of kids are reticent to do anything is because they don’t have a clear picture in front of them.

One of the key elements in estate planning is to write down what you’d want to see happen in the event of your death(s). Later, when we bring the farming child in, after lengthy discussions with the parents, and we explain it to him, it’s usually the first time this child has been shown a direction of where things are headed in his familys’ business.

As surprising as that might seem to you, even more surprising is normally this is the first time the parents have put these goals down in writing, as well!

When you put goals down on paper and both sides of the equation – parents and child(ren) – see these goals, it sets the brain in motion from both sides working towards those goals. Suddenly, Mom and Dad understand their estate planning goals, and see all the little day-to-day decisions they make along the way in life will affect the long-term future of the farm. They hadn’t seen it in this light before because they never thought of it in terms of ‘what if I’m not here and I have to write these goals down now?’ (commonly known as a will).

Junior, for the first time, sees the order of life, of maturing and aging, and finality of death and understands the day-to-day decisions he makes now will have a huge long-term effect on his own life, his family’s life, and his success.

Estate planning forces you to put your goals down in writing and its really fun to see business with both sides of the equation tracking towards their goals – now that they finally know what those are.

You’ll be surprised how quickly Jr. starts making better and better decision on the farm when he knows where he’s heading and how he’s supposed to get there. Your transition from active to retired, should you live, will eventually be made so very much easier and will still reflect the same goals you put into your estate plan.

Goals aren’t set in stone when put into writing and are subject to changing conditions. However, not putting goals down in writing, in your estate plan, just makes everyone wander around without knowing where they’re going – and then you get mad at Jr. for not being more decisive. Maybe it’s not his fault!

 “Keeping the Family Farm in the Family”
Great Plains Diversified Services, Inc.
1424 W. Century Ave., Suite 208, Bismarck, ND 58503 
Telephone: 701-255-4079
Fax: 701-255-6106
Toll Free: 1-800-373-4078

Michael Baron is not an attorney. Information given through written, verbal, or electronic means by Michael Baron or Great Plains Diversified Services, Inc. is not to be construed as legal advice. An attorney, tax advisor, or other registered advisor is needed for the completion of the estate planning process. An attorney must be consulted for legal advice and the drafting of legal documents.