There are countless books, articles and seminars with advice on farm succession but those resources often fall short of addressing how to salvage things when family discussions fall apart.
Read Also
The trick to low-stress farm succession
Clear communication during farm succession planning helps avoid conflict and preserve family harmony, consultant advises.
Farmers can take the teeth out of disputes by incorporating a purposeful family conference into the proceedings, farm management advisor John Poyser told a room of lawyers, accountants and other agriculture business consultants during an Oct. 23 professional development event in Edmonton.
Why it matters: Farms are big businesses and succession can be difficult, especially when there are multiple children with different priorities.
Poyser, who practices in Winnipeg, Toronto and Calgary, was partially drawing material from a textbook entitled “Avoiding the Family War.”
A family conference nips many succession pitfalls in the bud, before they’ve had time to fester or accrue cost for the people involved.
“I came to realize over the years — having conducted family conference after family conference after family conference after family conference — that it is a very powerful tool,” he said. “It doesn’t always avoid litigation, but it frequently avoids litigation.”
He also had a list of tips for a successful conference.
Don’t delay
First, the conference should be held as early as possible, said Poyser.
“The single most powerful tool to avoid a family fight is to have a family conference early, to put all the cards on the table, to the extent that your clients feel comfortable doing that, and then making sure that everyone understands the way it’s going to work, understands the rules they might have and then have an opportunity for discussion.”
The setting also matters, he noted. People often behave better in boardrooms than living rooms.
Transparency is key
When the day of the conference arrives, all parties should have all relevant documents on hand. That includes draft wills or signed wills.
“You might have an asset list on the table or a frank discussion about what the parents own so they know what you’re talking about, the objectives being pursued, the roles people are going to play,” he said.
“You’d have the lawyers present to explain the gobbledygook, because lawyer documents are frequently full of gobbledygook. And then, under those circumstances, you can have a meaningful and full and proper discussion.”
Sometimes clients are uncomfortable with sharing too much information with their families, he acknowledged. In those cases, he tries to find workarounds that his clients find acceptable.
“I will say, ‘you’re the bosses here. We don’t have to do the full meal deal. We don’t have to have all that stuff on the table. You don’t need to give them the wills in advance to look at. I can just describe what the will says. You don’t need to show them exactly what all assets are worth. They’re going to change anyway. We can give them approximations.’”
At the same time, he gently tries to steer participants toward the greatest transparency they’re comfortable with.
“I find that the higher level of transparency, the better the outcomes (and) the more assurance you get at the end of the process that you’re actually going to avoid the litigation you’re trying to avoid.”
Secrecy breeds significant mistrust and cost, in Poyser’s experience. He used the example of a hypothetical son of a farm couple, who is set to receive 60 per cent of the estate, while his sisters will split the remaining 40 per cent.
“You have a family conference and the daughter can look up to the parents and say ‘60 per cent?’ And the parents could say, ‘yes, here’s our reasoning.’ It takes away the ‘boogieman brother’ paranoia and replaces it with an honest discussion of what the parents actually want that serves the family’s future better.”
Don’t present before making decisions
Some clients may want to present a signed will to their children and grandchildren for informational purposes, to clarify roles and avoid surprises, Poyser noted. Others prefer to present an unsigned will so changes can be made based on family input.
One tactic that never works, he said, is holding a family conference before parents have made any decisions on their estate plans.
“What happens is entrenched warfare, politics, secret discussions, pointed fingers. It inevitably takes the estate planning process completely off the rails and it doesn’t get back on the rails sometimes.”
Who should be there?
Attendance at the conference varies by client. As a general rule, Poyser said the will makers, children and (if they’re old enough) possibly grandchildren can have a seat at the table. He discourages clients from inviting the children’s spouses.
“My experience has been, for some reason … as soon as you have sons-in-law and daughters-in-law present at the family conference, it’s far less productive. It’s far more aggressive. It’s far more likely to result in dissension. I don’t know why.”
Often, he said his clients have already decided not to include spouses. That could be due to the possibility of sons and daughters divorcing their spouses, rendering in-law concerns impermanent.
Your lawyer, not theirs
Some adult children assume their parents’ lawyer automatically becomes their lawyer, said Poyser. That’s not the case, and he encourages his clients to develop specific rules about information sharing.
“The rule I always recommend to the clients (that) we adopt is ‘we’re going to get together with your kids and we’re going to talk through your estate plan, but you’re my clients, not them. And in terms of information we’re going to share, we’re going to share information as you direct me.’”
His approach during the conference is to answer as many questions from adult children and other potential recipients as possible. After that, they’re on their own.
“I’m going to say to your kids, ‘we can talk about their assets today, we can talk about the estate plan, but if you’ve got questions, ask them now while your parents are here. I’m here to answer them. But after this family conference is over, no more.
“You can phone me next week and ask questions (and) I’m going to say I can’t talk to you … Go talk to your mom and dad. Maybe they’ll authorize me to have an additional discussion with you.’”
When things turn nasty, stop
Poyser has seen farm family conferences get heated. He recounted one such meeting where one of the children, upon finding out the parents’ asset distribution plans, threw a full teacup across the room.
When things start getting thrown, literally or metaphorically, it’s time to stop the meeting, he said.
“If you’re the moderator, if you’re the person leading the family conference, the tendency is to try to inject a solution immediately, to try to talk people down, to try to suggest your own solutions to avoid additional teacups being lobbed back in retaliation.
“And I don’t think that’s the right approach. I think the right approach is, if it comes off the rails and blows up, you stop.”
The moderator has three options in circumstances like these, he added. The first is to declare the conference over with the possibility of reconvening. The second is to proclaim the estate final.
“Option three, you can go back and say, you now understand that particular decision was not well received and you’re willing to entertain discussion to potentially make a change.”
This story is one of a two-part series highlighting farm succession tips from experts. See part two here.
