Four tips for growing a strong legacy on the family farm
ATB Wealth senior financial advisors share their top tips for overcoming the most common challenges for growing intergenerational wealth on the family farm.
By Christoff Boshoff and Myron Uhryn, MBA, CEPA, FEA, CIWM 12 August 2022 5 min read
Farming is a career like no other.
“It’s the cornerstone of any functioning society,” says Christoff Boshoff, senior financial advisor with ATB Wealth. “It helps way more than you and your family. It’s one of the most meaningful things you can do.”
Farming’s unique role in society is matched by the unique opportunities and challenges farmers face in creating legacies that last.
Boshoff and Myron Uhryn, also a senior financial advisor with ATB Wealth, have worked closely together for over a decade helping farmers grow their wealth and build their legacies.
Their credentials include MBA degrees and Exit Planning Advisor certifications.Uhryn also has a Family Enterprise Advisor designation, the top credential in Canada for advising business families. On top of their resumes, they both bring first-hand farming experience to their roles. Uhryn grew up on a farm and lived through sometimes-bumpy transitions that saw it passed down to the second generation.
“I feel your pain,” he says, “because I’ve lived it.”
Over the years, Uhryn and Boshoff have helped farming families craft strong financial plans that set up new generations for success while building durable legacies for those who came before.
Here are their top tips on growing a farming legacy that lasts.
1. Carefully define success for every member of the team.
You may be familiar with the adage that if you don’t know where you’re sailing, no wind is favorable. The first step to building any legacy or successful succession plan on a farm is figuring out what success looks like.
“It’s very important to figure out how you define success in succession planning on your farm,” says Uhryn. “Farmers often have a lot of emotional attachment to their land because of all the hard work and suffering that went into acquiring it, but later generations might not feel that way.”
“Who are all the stakeholders on the farm, and what does success look like for them? Is success just for dad, for the family, or for the business partners?”
These can be emotional and high-stakes questions for families to answer. Getting expert help from a third party can help create a vision of the future supported by every family member.
“We engage with the family and have private, confidential interviews with stakeholders to understand what’s important to them and how they define success,” says Uhryn. “We pull that together and come back to the group, with themes of what has surfaced in these discussions, without attributing any ideas to specific people.”
“The key here is that key stakeholders prioritize and take ownership of next steps.”
2. Discuss family and business issues separately.
Discussing the future of a family farm can naturally crop up at any family gathering. This works well as long as everyone gets along perfectly—which, as Uhryn points out, is unlikely to be the case over the lifetime of a farm.
“You need to have dedicated meeting time scheduled for this,” says Boshoff. “If not, it will spill over into everything else. The meetings should have agendas and documented outcomes.”
Uhryn and Boshoff both stress that family business meetings need to be formal, organized affairs with agendas and documented outcomes. An experienced financial planner can set your family up with the tools you need to make running these more formal meetings productively.
“On top of an agenda to keep the meeting on the rails, it can also be helpful to have a family code of conduct that everyone agrees to beforehand,” says Uhryn.
3. Don’t rely on unwritten understandings.
Uhryn and Boshoff strongly recommend that all aspects of a farming succession plan be thoroughly documented. Assuming today that every member of a farming family has the same unspoken vision for the future can cause challenges tomorrow.
“At a minimum, every family farm should have a shareholders’ agreement of the farm corporation,” says Uhryn. “Divorce rates being what they are, you should also consider a pre-nup or co-habitation agreement, especially if there’s more than one family living on the farm.”
Boshoff adds that various insurance documents are also crucial tools for managing risk in the capital-intensive world of farming.
Uhryn also advocates agreeing on a shared values and vision statement, to help raise awareness of potential conflicts of interest early on in the process.
“You need to ask yourself, ‘What do we agree on?’,” he says. “If we’re going to keep working together, we need to be on the same page. Reaching consensus on what the family stands for and documenting that is crucial. Family constitutions and other governance documents are great for that.”
Identifying and acquiring all of the different documents required is a complex task that touches on many different areas of expertise from lawyers to accountants to financial experts. A trusted and experienced advisor can help a busy farmer through this process.
4. Consider all of your options.
“Within farming there’s this idea that you never sell the land—that no matter what it must stay in the family,” says Boshoff. “For that to happen, one of three things need to be true.
“First, there needs to be somebody in the family who can run the farm when you step away. Second, the land can be rented out for enough money to meet your post-farming income needs. Or the third option is that you don’t need any farm income when you stop farming and the land can just sit there within the family.”
Checking one of those boxes is no small feat—and Uhryn says the first one in particular is a common stumbling block. Sometimes a family farm’s current operators assume their children are capable of running the farm on their own and that they actually want to do so. It’s worth testing both of those assumptions before the time comes for the farm to change hands.
“The process should be a bit like career planning,” says Uhryn. “You need to understand your values and your strengths to make a strong plan. Two-thirds of people don’t understand their character strengths. We can walk clients through a character strengths assessment to identify their top strengths that tend to persist over time, and provide a foundation for an ideal career.
Uhryn also thinks that farm kids should spend some time working away from the family farm to build confidence and help them decide if the farming life is for them.
So what happens if the next generation is ready and willing to operate the farm in the future? In that instance, an experienced and trusted financial advisor can help a farm owner assess their options and pick the best path forward.