Farm and Ranch Succession Planning - The Family Meeting
Volume 5 • Issue 7 • July 2015
The Counselor is a monthly newsletter of Hallock & Hallock dedicated to providing useful information on estate planning, business succession planning and charitable planning issues. In this month’s issue, we will look at how to successfully conduct a family meeting. If you are interested in learning more about the ideas and processes discussed in this newsletter, please contact us for an initial consultation.
One constant in a successful farm and ranch succession plan (or any family business for that matter) is the family meeting. Because succession planning is about bringing together the goals of multiple individuals, it means that a certain amount of give and take will be needed. If succession planning is viewed as a winner take all, my way or no way, proposition, the odds of success will be very slim. The family meeting or meetings become a forum to listen to the ideas and concerns of all the relevant parties and then put in motion a plan that will allow for the farm or ranch to successfully transition to the next generation.
Who Should We Invite?The first question to address is who should attend? In a succession planning situation, there are multiple parties that will have varying viewpoints on what should happen with the farm or ranch. Grandma and Grandpa may own the land, Dad and Mom may run the operation, and their son or daughter may be coming up right behind them. Other siblings will be interested in how things work out and what, if anything, they will get. Spouses will be concerned as well about how the outcome affects their financial stability and place in the family. Certainly the landowners, those who are running the operation, and those who are expected to take over the farm or ranch should be in attendance. But, should the other children be invited to participate as well and what about spouses? Each family will want to look at the advisability of the involvement of these individuals and the timing of that involvement.
An additional question is whether the family will want the involvement of a third-party facilitator to assist moving the process forward. A well-trained facilitator can help in the decision making process of who to involve, where to have the meeting, and conducting the meeting itself. Engaging all of the individuals in this meeting and allowing them to feel valued is truly an art that is often best left to a well-trained third- party with some emotional distance from the situation.
Where Should We Go?
The next question is more logistical – where and when should the meeting take place? Do you have the meeting at the family home or in a more neutral location? Maybe it is difficult to bring everyone together in one physical location so an online option may be better. Succession planning meetings should be in a neutral location – a place where people can focus on the important issues to be addressed and not be distracted by the demands of home or business. The timing should be separate from a family holiday or gathering when family roles can tend to dominate. In planning for the logistics of the meeting, consider the personalities involved. If some of the individuals are more reluctant to express their opinions, it is important to have a setting that is conducive to eliciting and valuing their thoughts as well.
What Do We Talk About?
With the who and where determined, it is time to set the agenda for the meeting. The initial meeting agenda should have three basic items:
Set goals and objectives for the farm or ranch transition;
Reconcile priorities; and
Turn goals and objectives into action steps.
Remember, in group or team settings it is sometimes the loudest voice, not the most insightful that can prevail. So make room for everyone to have their opinions heard, understood and valued. Don’t be swayed by the power of personality over substance of ideas. Also, keep in mind what is known as the “Abilene paradox.” The Abilene paradox refers to the phenomenon where a group of people collectively decide on a course of action that is counter to the preferences of many or all of the individuals in the group. The name comes from the following anecdotal story told by Jerry Harvey in a 1974 article:
On a hot afternoon visiting in Coleman, Texas, the family is comfortably playing dominoes on a porch, until the father-in-law suggests that they take a trip to Abilene for dinner. The wife says, "Sounds like a great idea." The husband, despite having reservations because the drive is long and hot, thinks that his preferences must be out-of-step with the group and says, "Sounds good to me. I just hope your mother wants to go." The mother-in-law then says, "Of course I want to go. I haven't been to Abilene in a long time."
The drive is hot, dusty, and long. When they arrive at the cafeteria, the food is as bad as the drive. They arrive back home four hours later, exhausted.
One of them dishonestly says, "It was a great trip, wasn't it?" The mother-in-law says that, actually, she would rather have stayed home, but went along since the other three were so enthusiastic. The husband says, "I wasn't delighted to be doing what we were doing. I only went to satisfy the rest of you." The wife says, "I just went along to keep you happy. I would have had to be crazy to want to go out in the heat like that." The father-in-law then says that he only suggested it because he thought the others might be bored.
The group sits back, perplexed that they together decided to take a trip which none of them wanted. They each would have preferred to sit comfortably, but did not admit to it when they still had time to enjoy the afternoon.
The Abilene paradox demonstrates that invalid or inaccurate information can lead to actions that are contrary to what the group really wants to do. Make sure you are receiving everyone’s honest input about the actions that are proposed.
Keep written minutes of the meeting so that there is a good record to refer back to in future meetings. Circulate the minutes among the participants for approval.
With the action steps identified, follow-up is important. Set a date to meet again and continue to move the plan forward. If someone is given a responsibility, there should be an opportunity to return and report on the outcome of the assignment.
This Newsletter is for informational purposes only and not for the purpose of providing legal advice. You should contact an attorney to obtain advice with respect to any particular issue or problem. Nothing herein creates an attorney-client relationship between Hallock & Hallock and the reader.