Happy Halloween! Here in Logan we have had mild fall thus far, but snow and winter is on the horizon. As we are getting ready for the fun of Halloween night I thought I would share a scary story with you. In the United States, approximately 96% of the 2.2 million farms are classified as “family farms.” A “family farm” is one in which the majority of the business is owned by the operator and individuals related to the operator by blood, marriage or adoption. Now, here is the scary part. Of these family farms only about 30% will transfer successfully to the 2nd generation and less than 10% will make it to a 3rd generation. Not great odds considering most folks I speak to want to transfer the farm to the next generation. What happens to those that don’t make it? Well that can be really scary.
There is a GEICO commercial out right now mocking teens in horror movies. Instead of getting in a running car, the teens decide it would be better to hide behind the chainsaws. When you see these statistics you may feel like your only choice is to hide behind the chainsaws. But, in reality, there is a running car waiting for you. There are good choices you can make that will give you and your family a much better chance to beat the odds.
Kevin Spafford in his book Legacy by Design teaches us that the three leading causes of failure in passing on the family farm are:
- Inadequate estate planning,
- Insufficient capitalization, and
- Failure to prepare the next generation properly.
Here is the good news. Each of these can be remedied with a little effort and good advice. The great Jesse Owens said: “We all have dreams, in order to make dreams come into reality, it takes an awful lot of determination, dedication, self-discipline and effort.” If you want your family to avoid the nightmare that can occur when the transition of a family farm fails, take the time now to address these three issues. Here is some even better news – you don’t have to go it alone. Qualified advisors can help you and your family address each of these areas. So, enjoy Halloween, but don’t run and hide behind any chainsaws.