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Communicating an Estate Plan to Heirs
By Myron Friesen
Submitted by J.T.
My husband and I have farmed together for over 40 years and have been blessed with four children. When our kids were younger, we worked and played together and tried to teach them to be independent and cooperative people. As our children grew up, they all got married and had children.
One of our children is farming with us, and two of our children have been through divorces. Generally, all of them get along with each other, but some get along better than others. They all have different careers and financial situations.
We have been working on our estate plan and know what we want to do. There were some really tough decisions, but it is even more difficult to decide how we want to communicate this to our children. Our farming son was involved in the planning because this directly affects him. Should we now tell all of our children? Do we need to go through all the details? If we do tell them, should we only tell our children or also include their spouses? Do we have to justify why we did things a certain way? Is it important that they agree or just that they understand?
We all remember giving that first speech in front of people. Talking to a family group can bring back that same anxiety, especially when money is involved. One of the first things you need to determine is if you are going to simply be telling them what you have decided or if you are asking them for ideas. This is a huge point for spouses to agree on prior to a family meeting. Asking for your children’s input can quickly turn into negotiating for inheritance.
For some children, money equals love. Therefore, if they receive fewer dollars, they assume they are loved less. With farm distribution, there are times when the farming heir appears to get a financial advantage on paper. Sometimes this may be very legitimate if the farming heir has worked hard and helped to grow the farm. Other times, the truth is that person has just hung around waiting for the farm to fall into his or her lap. Know the difference and be honest with that in your planning, and it will be much easier to explain to all.
Who to invite? In some situations, it makes sense to invite all of your children if you feel they can all handle and process the information maturely. Remember, the purpose of the meeting is to solve a problem – not create one. Spouses are also likely to be involved anyway, so including them in a meeting may be OK, provided they understand this is the time to listen, not to talk. Calmly mention a few ground rules before starting the meeting.
Explaining details is fine, but don’t think you need to turn them all into estate planning experts.
Observing children’s reactions at a meeting like this can be quite revealing about how things will go in the future. Your approach to this meeting is important. Farm continuation planning is not torture; it should be approached with excitement. You should be celebrating a great accomplishment of passing on your farm and assets to your children. In many situations, your children will be inheriting more than they have earned themselves, which they should all celebrate. After the meeting, have a meal or do something fun.
J.T., you love your family and your farm. Don’t be surprised if some emotions show up.
Your Generating Success Adviser Team
Myron Friesen is co-owner of Farm Financial Strategies in Osage, Iowa. For the past 15 years, he’s worked exclusively with Midwest farm families to develop farm transition strategies. Friesen grew up on a Mountain Lake, Minnesota, farm. He owns and operates a 620-acre crop and livestock farm with his wife and four children. farmestate.com; firstname.lastname@example.org
Dr. Donald J. Jonovic is founder of Family Business Management Services in Cleveland, Ohio. He focuses on management, growth, and ownership transition issues. familybusinessmgt.com
Jolene Brown is a professional speaker, author, farmer, and family business consultant. Her tested business tools provide leadership and management solutions for the people who feed, clothe, and fuel the world. jolenebrown.com