May/June 2024 - 30

BUSINESS
BY JEFFREY S. DEWALD CLU, CHFC, CBEC
THE
SURPRISING
CHALLENGE
Why do most
succession plans fail?
I
n our previous articles we've explored the importance of
planning, and why every operation needs two separate
succession plans. But even operations that have plans in place
sometimes fail to transfer to the next generation. Why is that?
For decades, conventional wisdom held that succession
plans failed because of economic or environmental reasons:
Taxes, particularly estate taxes. The challenge of providing
a " fair " inheritance to all the children - those in the
operation and those off-farm. Poor financial management.
Too much leverage, coupled with a bad crop, or an ill-timed
decision to " diversify " into new crops like hemp or barley.
Yet an MIT/Johns Hopkins study determined that 60%
of failed succession plans were due to a breakdown of
trust and communications within the family. Another 25%
of the failures were caused by failure to prepare heirs
to lead the business, while 12% were due to a failure of
mission or vision. Only 3% of the failures were due to a
poorly designed plan. (Source: Williams and Preisser
Preparing Heirs: Five Steps to a Successful Transition of
Family Wealth and Values).
30 | MAY/JUNE 2024
Trust and communication
We've witnessed trust and communication issues with
the clients we serve. Perhaps you have as well? Maybe
even in your own family or a neighboring farm?
Often, Dad is a stoic individual, and not a particularly
good communicator. He's happier in the cab of his combine
than in a meeting. Clients' children often tell us: " We're
frustrated. Dad won't tell us 'the plan.' Or even if there is
a plan! When will he step aside or scale back and give us
a chance? When will he feel we will be ready? What do we
have to do to get there? Which of us will run the operation
when he's gone? What will the other siblings' roles be? "
We've also seen sibling rivalry and friction, sometimes
stemming from perceived slights dating back to high
school. Occasionally, there is a perception that one of the
children is getting preferential treatment. Dad's always
managed to keep a lid on the pot, but will it boil over when
he's longer at the helm?
We've seen situations where a son-in-law or
daughter-in-law who didn't grow up in a farm family
has understandable concern about their future financial
security. Not knowing what " the plan " is can cause
fear and resentment. Occasionally these concerns are
insurmountable, but more often good communication can
settle things down. But these can be emotionally charged
conversations, and may require an impartial facilitator/
moderator who doesn't share your last name!

May/June 2024

Table of Contents for the Digital Edition of May/June 2024

Editor's Letter
On-farm AI
Advancing research in biocontrols
To price or not to price
2024 Farm Market report
Salinas Valley tech
Fresh Views
Organic Grower
Business
Farm Market & Agriculture
Classifieds
Advertiser Index
May/June 2024 - 1
May/June 2024 - 2
May/June 2024 - 3
May/June 2024 - Editor's Letter
May/June 2024 - 5
May/June 2024 - On-farm AI
May/June 2024 - 7
May/June 2024 - 8
May/June 2024 - 9
May/June 2024 - Advancing research in biocontrols
May/June 2024 - 11
May/June 2024 - To price or not to price
May/June 2024 - 13
May/June 2024 - 14
May/June 2024 - 15
May/June 2024 - 2024 Farm Market report
May/June 2024 - 17
May/June 2024 - Salinas Valley tech
May/June 2024 - 19
May/June 2024 - 20
May/June 2024 - 21
May/June 2024 - Fresh Views
May/June 2024 - 23
May/June 2024 - 24
May/June 2024 - Organic Grower
May/June 2024 - 26
May/June 2024 - 27
May/June 2024 - 28
May/June 2024 - 29
May/June 2024 - Business
May/June 2024 - 31
May/June 2024 - Farm Market & Agriculture
May/June 2024 - 33
May/June 2024 - Classifieds
May/June 2024 - Advertiser Index
May/June 2024 - 36
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https://www.nxtbook.com/greatamericanmediaservices/VGN/march-2024
https://www.nxtbook.com/greatamericanmediaservices/VGN/february-2024
https://www.nxtbook.com/greatamericanmediaservices/VGN/vgn-digital-seed-guide-2024
https://www.nxtbook.com/greatamericanmediaservices/VGN/january-2024
https://www.nxtbook.com/greatamericanmediaservices/VGN/buyers-guide-2024
https://www.nxtbook.com/greatamericanmediaservices/VGN/december-2023
https://www.nxtbook.com/greatamericanmediaservices/VGN/november-2023
https://www.nxtbook.com/greatamericanmediaservices/VGN/september-october-2023
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https://www.nxtbook.com/greatamericanmediaservices/VGN/april-2023
https://www.nxtbook.com/greatamericanmediaservices/VGN/march-2023
https://www.nxtbook.com/greatamericanmediaservices/VGN/vgn-digital-seed-guide-2023
https://www.nxtbook.com/greatamericanmediaservices/VGN/february-2023
https://www.nxtbook.com/greatamericanmediaservices/VGN/january-2023
https://www.nxtbook.com/greatamericanmediaservices/VGN/december-2022
https://www.nxtbook.com/greatamericanmediaservices/VGN/buyers-guide-2023
https://www.nxtbook.com/greatamericanmediaservices/VGN/november-2022
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https://www.nxtbook.com/greatamericanmediaservices/VGN/march-2022
https://www.nxtbook.com/greatamericanmediaservices/VGN/february-2022
https://www.nxtbook.com/greatamericanmediaservices/VGN/seedguide-2022
https://www.nxtbook.com/greatamericanmediaservices/VGN/buyersguide-2022
https://www.nxtbook.com/greatamericanmediaservices/VGN/january-2022
https://www.nxtbook.com/greatamericanmediaservices/VGN/december-2021
https://www.nxtbook.com/greatamericanmediaservices/VGN/november-2021
https://www.nxtbook.com/greatamericanmediaservices/VGN/october-2021
https://www.nxtbook.com/greatamericanmediaservices/VGN/september-2021
https://www.nxtbook.com/greatamericanmediaservices/VGN/august-2021
https://www.nxtbook.com/greatamericanmediaservices/VGN/july-2021
https://www.nxtbook.com/greatamericanmediaservices/VGN/june-2021
https://www.nxtbook.com/greatamericanmediaservices/VGN/may-2021
https://www.nxtbook.com/greatamericanmediaservices/VGN/april-2021
https://www.nxtbook.com/greatamericanmediaservices/VGN/march-2021
https://www.nxtbook.com/greatamericanmediaservices/VGN/february-2021
https://www.nxtbook.com/greatamericanmediaservices/VGN/seedguide-2021
https://www.nxtbook.com/greatamericanmediaservices/VGN/buyersguide-2021
https://www.nxtbook.com/greatamericanmediaservices/VGN/january-2021
https://www.nxtbook.com/greatamericanmediaservices/VGN/december-2020
https://www.nxtbook.com/greatamericanmediaservices/VGN/november-2020
https://www.nxtbook.com/greatamericanmediaservices/VGN/october-2020
https://www.nxtbook.com/greatamericanmediaservices/VGN/september-2020
https://www.nxtbook.com/greatamericanmediaservices/VGN/august-2020
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https://www.nxtbook.com/greatamericanmediaservices/VGN/may-2020
https://www.nxtbook.com/greatamericanmediaservices/VGN/april-2020
https://www.nxtbook.com/greatamericanmediaservices/VGN/march-2020
https://www.nxtbook.com/greatamericanmediaservices/VGN/february-2020
https://www.nxtbook.com/greatamericanmediaservices/VGN/buyersguide-2020
https://www.nxtbook.com/greatamericanmediaservices/VGN/january-2020
https://www.nxtbook.com/greatamericanmediaservices/VGN/december-2019
https://www.nxtbook.com/greatamericanmediaservices/VGN/november-2019
https://www.nxtbook.com/greatamericanmediaservices/VGN/october-2019
https://www.nxtbook.com/greatamericanmediaservices/VGN/september-2019
https://www.nxtbook.com/greatamericanmediaservices/VGN/august-2019
https://www.nxtbook.com/greatamericanmediaservices/VGN/july-2019
https://www.nxtbook.com/greatamericanmediaservices/VGN/june-2019
https://www.nxtbook.com/greatamericanmediaservices/VGN/may-2019
https://www.nxtbook.com/greatamericanmediaservices/VGN/april-2019
https://www.nxtbook.com/greatamericanmediaservices/VGN/march-2019
https://www.nxtbook.com/greatamericanmediaservices/VGN/february-2019
https://www.nxtbook.com/greatamericanmediaservices/VGN/buyersguide-2019
https://www.nxtbook.com/greatamericanmediaservices/VGN/january-2019
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