What is in this article?:
- Is your Heir Apparent? | How Two Families Negotiated Equitable Succession Plans
- Considerations in succession planning
When grandson Darren asked Glen and Marilyn Riekhof about getting into farming, it was good news. Keeping the farm in the family was important to both Riekhofs, but with two children and three other grandchildren not interested, it presented a challenge.
Five years later, Darren, Glen and Marilyn are one year into their formal succession plan and the farm’s future looks good, but it hasn’t been easy getting there.
“The hard part is being patient,” says Marilyn. “There’s a way to get this done, but you have to stay at it until you get answers that satisfy you.”
Glen and Marilyn Riekhof, who farm near Concordia, MO, went to information sessions and read a lot of books on farm transitions but didn’t find a “one-size-fits-all” answer.
“We considered a lot of things but in the end we decided we had to make up our own plan,” says Glen.
They also found useful resources through the Missouri Extension Service, their lawyer, their accountant and farm planner contacts.
In the meantime, Darren worked summers on the farm, “to see how he liked it and whether we would get along,” Glen says. That led to the next step, when Darren leased Glen’s cattle, assuming herd-management responsibilities.
Now Darren also leases Glen’s equipment and the Riekhofs’ ground under terms that will allow him to gradually take on more ownership.
That brings a new challenge, says Glen: “At some point you have to let go of the reins and let them make the mistakes, because in the end they have to do it.”
Throughout the process, Glen and Marilyn kept family informed about the project, even taking their son, daughter and Darren to meet advisors and get a feel for family personalities and relations.
“A booklet that the lawyers put together” sets out the details of how everything is supposed to be, Glen explains. “We also drafted a letter that explains our goals and our thought process that led to the plan.
“We also found what’s fair isn’t always an equal division. You have to consider that the person taking on the farm has already put in a lot of sweat equity that you can’t put a dollar value on, and they’re taking on a lot of additional responsibility.”
Meanwhile, the transition process is very different for Charlie and Millie Hurst in Tarkio, MO, who are bringing grandsons into an operation that already includes three sons and two grandsons-in-law. The Hurst family has evolved a system of sharing land and equipment costs on a sliding percentage basis that has helped the next generation immensely, according to Charlie’s son Kevin.
“We’re now splitting equipment costs among seven or eight people. We try to keep everything not equal but equitable,” he says.
The critical question for the Hursts is making sure there’s enough land to support each family member, they say.
“We’ve been fortunate enough to have land offered, and we’ve actively hunted for land so when the boys finish college they know they have the opportunity to join the farm if that’s what they want,” Kevin explains.
In addition to their long-term planning for succession, he notes another essential factor in their success: “All of us have put the operation and what’s best for it ahead of what might be best for us as individuals. I think it’s important that the future of the operation is most important in everyone’s mind.”