In this world nothing can be said to be certain, except death and taxes. —Benjamin Franklin
Shock ripped through him as the doctor continued to explain his condition. Barely catching fragments of words like “tests” and “open heart surgery,” his mind raced. “Am I going to live?” “Can I beat this?” “God, why?”
That evening as he and his wife returned home to their ranch, they stopped at the gate entrance. Looking out across the hills in silence, thoughts cycled through determination to fight and worry about the future of his family. He squeezed her hand and they began to drive through the cattle-spotted legacy they devoted their lives to building together. The best and worst days of his life were on this ground — where he taught his children to love the Lord, the land and how to make an honest living, just like his father had taught him.
Closing his eyes, he began to wonder, “Is my family ready to carry on without me?”
Throughout this series, we’ve diligently exposed the delicate matters surrounding the development and implementation of succession plans. They are difficult topics for families to face, exposing individual vulnerabilities to their very core in the realization, expectantly or unexpectedly, everyone’s life comes to an end. And as terrifying or peaceful as that fact of life may be, these topics must be faced head-on if a family operation is going to survive for the next generation.
“The motivations for family operations to actually start putting together and implementing a succession plan are very different,” explains Dave Specht, founder of Advising Generations, LLC, and author of the new book, The Farm Whisperer — Secrets to Preserving and Perpetuating Farms.
Specht says sometimes the conversations are spurred with business stakeholders thinking, “I want to be intentional and make it so my family doesn’t have to react in a time of crisis.” They nurture and grow a management plan over a long period of time.
However, most often it is a health scare that drives key family-business members to be proactive.
“There was a ranch family in Nebraska that I worked with years ago,” Specht recalls. “The controlling owner was the second generation and started having serious heart issues, to the point where he started looking at things as if he was going to die. I was brought in to facilitate conversations about the transitioning process between him and his grown children, and it soon became clear that this had been something the younger generation had been wanting for a long time — but it took a heart issue for that to come into process.”
Whether it be dealing with a health crisis or even death, processing devastating news about a loved one is emotionally taxing — sometimes impacting individuals’ abilities to make sound, rational decisions. And when a business-management plan is forced to be put together in a short amount of time, it also puts the family at a high risk of losing flexibility and control.
“Aside from the stress and anxiety family members are faced with while dealing with the personal emotions of a crisis, if anyone you’re working with on a professional level knows that you’re having health issues, it also affects your relationship with them,” Specht adds.
A major relationship at stake is with financial professionals. If there are known health issues and a lender is not comfortable with the incoming generation, he may not extend the same credit and terms, Specht warns.
Another big factor is the timeliness of the multiple professionals it takes to collaborate for a plan to come into action. For example, in an extreme case where a business decision-maker only has weeks to live because of a sudden health issue but the estate attorney needs upward of three months to get everything in order, it will add to the stress level of everyone involved.
“Planning early allows for time and perspective to customize and adjust the plan to fit the operation and the skills of the family members [who] will be called upon to manage and own it,” he continues. “Waiting to plan minimizes options, increases frustration and decreases the likelihood for successful continuity of the operation.”