---

Editor’s note: This is part two of a two-part feature regarding farm transitions. In the previous issue of Dairy Star, we gave examples of challenges that occur during farm transitions. Here we present information for success.
Today’s farm families have more resources and places to turn for advice when planning a transition to the next generation. The help that is available, through extension services, colleges and universities, private firms and more, is often more personalized and leads families through the process.
Shawn Meyer is a farm business management instructor at Minnesota West Community and Technical College in Hutchinson, Minnesota. He has more than 17 years of experience in farm finance and working with farm families as they plan for transitions.
Meyer said walking families through the process, beginning to end, is better than tossing information at families and expecting them to apply it.
“Then the family leaves more confused than when they walked in because all we did was throw a bunch of options at them and didn’t help them through it,” he said.
Meyer said the process should include all family members and help the family establish clear goals.
“What should always drive the transition are your goals,” he said. “You also need to involve the off-farm siblings to the extent that they feel like they are included. It’s fair that they have part of that initial conversation. They might not get exactly what they want, but at least they had a chance to be part of the process.”
Meyer said farm transitions are more complex than most business transitions because they involve family members’ rooted emotions.
“We need to work through all the emotional and family dynamics before we ever worry about if it’s a (limited liability company),” Meyer said.
Helping farm families successfully transition is important to Jim Molenaar as well. For the past 41 years, Molenaar has worked as an instructor in farm business management, the past eight years at St. Cloud Technical and Community College. A specialist in farm succession planning, Molenaar also went through a farm transition himself and is a farm advocate for the Minnesota Department of Agriculture.
After looking for programs that could best help, Molenaar attended courses offered by Dave Goeller at the University of Nebraska-Lincoln, who had developed a successful program to guide farmers through transitions. With Goeller’s design in mind, Molenaar now partners with Megan Roberts from the Southern Minnesota Center of Agriculture to offer free seminars.
“We team teach what I call a marriage encounter for farm families,” Molenaar said. “We’ve been doing this for farm succession for five or six years.”
The seminars begin on a Friday night and then continue on Saturday.
“We try to get as many people of the farm family as we can into the room, and we go through a process that they can use to reach their own conclusions,” Molenaar said. “No two farms are the same. Each farm has its own unique challenges and ideas.”
The seminars are offered during the winter. During the sessions, Molenaar and Roberts ask questions that foster collaboration and goal setting. Legal and tax aspects of a transition are addressed as well.
“The very first question we ask in our seminar is whether or not you want your farm to continue after your lifetime,” Molenaar said. “If the answer is no, then it’s pretty easy. All we need is a will, but if you do want it to continue, then the communication, expectations and what’s fair and what’s equal becomes more challenging.”
Molenaar said labor is the easiest portion of a transition. The most difficult is management. Families must discuss both, such as what would be fair compensation for the labor and when should the next generation become owners versus employees.
“The actual decision making of a farm is difficult to turn over,” Molenaar said. “Do I take off my manager hat and put on my mentor-teacher hat? If the older generation is able to let go of the reins and let the younger generation come in and implement things and get an operating interest, it’s huge.”
To bring the transitioning farm family to agreement, setting common goals is key.
“What does the family want their farm business to look like 30 years from now?” Molenaar said. “It’s a compromise like with anything else. It can work well if the older generation is willing to let go a little and there isn’t too much debt. Then, it’s really a matter of putting the puzzle together and deciding what the family wants to accomplish.”
Three of Molenaar and Robert’s seminars are already planned for winter 2023 in Minnesota: Feb. 4-5 in Mankato, March 10-11 in St. Cloud and March 31 through April 1 in Mahnomen.
Registration will soon be available at z.umn.edu/farmtransition. The website also offers tools and tips for planning a farm transition. Those with questions about the seminars can also email Molenaar at [email protected].
“The seminars are really helpful if people take the time to do it,” Molenaar said.
The University of Wisconsin-Madison also offers webinars and workbooks at farms.extension.wisc.edu.
Although each family has an individual situation and set of needs, when plans that were successful in the past are shared with families planning transitions today, the information can help those families create their own plans.
For example, one family of six children came up with their transition plan when the children were nearing adulthood. The farm was changed to a business corporation. Mom and Dad held almost all shares with each child receiving one share. Those who wanted to make the farm their profession received more and more shares from Mom and Dad’s shares through sweat equity and time. If the other children wanted to sell their shares back to the farm, they could, but the sale was final. As time went on and the older generation neared retirement, the two children who farmed had worked their way up to being equal owners with their parents, thereby having an equal say in decisions.
Such a plan may not work for every family. But, knowing a variety of plans that have worked gives other families a place to start when brainstorming their own plans. Since specialists, such as Molenaar and Meyer, have discussed many farm-transition plans with families, getting advice from specialists means families have access to more ideas.
Attorney Shayna W. Borakove, of Borakove Osman LLC in Middleton, Wisconsin, has more than 14 years of experience as a farm continuation practice leader at her firm.
She agreed getting advice is important.
“You don’t know what you don’t know,” Borakove said. “The outcome of planning one’s own farm transition without the advice and counsel of their attorney, certified public accountant, financial advisor and/or other farm transition advisor would be about as predictable as a game of Plinko. With the advice and counsel of (a specialist), the client can understand the potential consequences of a plan and make better, more objective decisions.”
Borakove also helps families clarify their vision and set goals.
“To prepare, first the family should ask themselves, if there were no rules, no taxes, no restrictions or judgment of any kind, what would we want to happen with the farm if we couldn’t make the decision?” she said. “Second, having a sense of the time horizon as to when a transition could or should happen, from the farm owner’s perspective as well as the farm successor’s perspective, would be helpful.”
Advisors agreed that planning, inclusion and communication are key.   
“Farms that do the planning are much more likely to have a successful farm transition than those that do not plan,” Molenaar said. “It doesn’t guarantee success, but it improves the odds.”

---