Your kids might not be kids anymore; perhaps one or more of your adult children have joined your ranching business and maybe they have complicated the situation by bringing a spouse. Lucky you! Seriously, isn’t this what most ranchers dream of?
Now you’ve got some big questions to answer and some effective communication that needs to take place.
What do you owe the returning adult children?
Are they owed an inheritance? Are they owed a share of the ranch? If you have ranching and non-ranching children, how do you plan to deal with what is likely a very large asset base?
I understand both sides of this argument, and I don’t plan to try to sway you to one side or another. However, I do have a strong opinion on one thing that you owe your returning adult children, and that is clarity of the asset succession plan.
If one or more of your children are building their life around the ranch then they are most certainly wondering what the plan is. If you’ve made the plan known to all, then good for you. Just let them know if you change your plan.
If you are like many other farming and ranching families, and the plan is unknown by your kids you are doing a disservice to your kids. This lays the foundation for resentment, jealousy, and strife. Which may result in your family being pulled apart from the inside out after you are gone, not to mention the potential failure of the ranch business as a whole.
I know those are some pretty strong words, but at RMC we see this occur far too often when the current owners don’t make a plan or share it with those it affects..
“Come home and join us on the ranch junior. Your mom and I would love to have you raise your family here and carry on the legacy. I know we can’t afford to pay you what you’re worth but someday we will make it up to you.” Statements like this are made with good intentions, but decades pass, and nothing is formalized. Resentment builds or expectations grow till they reach a boiling point, anger makes words come out of our mouths that are difficult to take back.
If you were building up a pile of assets separate from your kids’ lives it would be different. In that case it could be you and your spouse’s business alone. But when your kids’ lives are deeply entwined in your asset base then they need to know the plan for the future.
The earlier the plan is known the better. It is best to disclose your plans even before the kids make major life decisions, like making a move home to build their careers on your ranch. Your plan must be shared with them before they have given up their “hireable years”, when they still have the option to make a shift if they realize they are in an undesirable situation. Parents are often afraid that by sharing their plans they will upset the kids and it will strain or sever relationships while they are alive. This risk is real, but can be reduced with careful planning and communication. When done well, parents can make clear their intentions and put mechanisms in place to prevent many of the undesirable outcomes.
If returning heirs will need to buy out their siblings to keep the ranch intact, then they need to know now, so they can help organize the ranch business to make that happen. If non-ranching heirs will get no inheritance, or an inheritance worth far less than ranching heirs, then they need to know that and hear directly from you along with your reasons why. Perhaps your plan is some kind of combination of different entities and buy-sell agreements that need to be understood by those who will own and control them. In all cases this is stuff that is critical to share now, not later when you are gone physically or mentally and can’t answer questions or provide your reasoning.
If you are reading this from the other side of the coin and you are the ranching heir that is wondering what the plan is, then it is incumbent upon you to ask for clarity with love in your heart.
“Mom, Dad, I love being a part of this ranch and wish to carry on what you have built. I fully intend to build my life on this place, but it isn’t just about me anymore. I brought this amazing partner onto the ranch, and I owe it to them and my family to create some security in our lives. I know this is tough for you, and I’m not asking for anything special, I just want to know what your plan is so that we can plan around that. How much time do you need? 3 months? 6 months? A year? Let’s put a date on the calendar and we can meet then and you can share the plan for the future with me and my siblings.”
If you need a serious nudge and help coming up with your plan, we are offering the Ranching for Generations Intensive open to all Ranching for Profit Alumni businesses March 24-27, 2025 in Oklahoma City. Dave Pratt has developed an amazing curriculum that will help you evaluate alternatives and develop your estate plan for farm/ranch succession. He describes the program well in the following video.
We know ranch life is busy and there always seems to be a more important task to work on than succession planning but don’t let time pass you by, as one day it will be too late.
Hello Dallas,
As I was reading your column this morning I drifted back to the Succession conference that RMC held in Sheridan in 2019. Our experience there was critical in helping us move ahead in our own planning process. But looking back, one of the most important things we learned was that –based on the dozens of people we spoke with–ranchers and farmers are generally very unsuccessful at planning and managing succession. It’s just too hard to do alone and we (apparently) don’t have the required skills. So as I read along today, I was pleased to see RMC offering the Ranching for Generations workshop. Clearly, many of us need that sort of help. Just what the doctor ordered.
Best wishes,
John Marble
Crawfordsville, Oregon