Lynsey McAnally (00:02):

Angus at Work, a podcast for the profit-minded cattleman, brought to you by the Angus Beef Bulletin. We have news and information on health, nutrition, marketing, genetics, and management. So let’s get to work, shall we?

Hello and welcome back to Angus at Work! With Memorial Day family gatherings fresh on the mind, the question begs to be asked: What’s the plan for the future of the family farm? Though the upcoming Feeder-Calf Marketing Guide will include information on how to start the conversation, we couldn’t miss out on the opportunity to talk to an expert in the field in advance. I’m Lynsey McAnally, and on today’s episode you’ll hear more from Shauna Hermel and our guest, Ron Hanson of the University of Nebraska, regarding how to discuss the succession planning with loved ones so that everyone with a stake in your family operation is on the same page moving forward. So, let’s dive in!

Shauna Hermel (01:13):

Hello and welcome to the Angus at Work podcast! I’m Shauna Hermel, editor of the Angus Beef Bulletin, and we are here talking today with Dr. Ron Hanson. Dr. Hanson, can you give us a little bit of background on yourself?

Ron Hanson (01:29):

I’m a professor emeritus from the University of Nebraska. I taught in the College of Ag Sciences at the university for 46 years, and I have spent probably close to 40 years working with farm and ranch families, basically on the family dynamics, the family issues in terms of communicating, working together, keeping a family operation — farm or ranch — in the family for future generations and to make sure that their legacy continues.

Shauna Hermel (02:02):

I know when I first started my career at BEEF Magazine, I think I had an opportunity to listen to you speak at an NCBA convention. So this has been a passion of yours for a long time.

Ron Hanson (02:15):

It has. I mean, I’ve just been very blessed and very fortunate to have had the opportunity to travel across the country, various meetings, conferences, conventions, and visit with farm and ranch families, and they are very important to me. Those family relationships are priceless. I always remind my audience that farms and ranches can be replaced, but families cannot. And if you get into a family situation where family members stop communicating, getting along, not even speaking to each other, those are very unfortunate situations. And so I try to remind folks that family farming is a love and passion of mine. I greatly admire what these families have accomplished and their work and their dedication many times get through the tough years, the struggles that agriculture presents. But the key point is that from my perspective, family farms particularly creating opportunities for young producers to come back home is very important for agriculture and particularly for rural communities.

(03:34):

The impact to make sure that those young families have that opportunity. It impacts a small town, it impacts their school, it impacts their church. And if you have a family situation where, for whatever reasons, the farm gets divided or split apart or sold, that family operation disappears. And unfortunately, in all my years, my travels, I see a lot of broken families. I see a lot of dysfunctional relationships. And with good communications, a lot of that could have been resolved or even avoided. And so that became my mission. You go to my website, Passing on the Farm, my mission is simply keeping farms in the family and, most importantly, family members on their farms for future generations. And to make sure that legacy of family farming, family ranching always continues.

Shauna Hermel (04:35):

You bet. We have a lot of producers we just celebrated here at our Angus convention who have had an Angus herd in the family for a 100 years or more, and some others that had it for 50 years or more. Ours, successes is our producer's success in wanting to keep them in business. One of the things that Angus Media has done here in the last year is to do an Industry Insight survey through CattleFax where we were going beyond the Angus family to the entire beef cow herd family, and asking how many of those producers had a written succession plan. There's a lot of talk about who's going to be coming back into production agriculture. Some of the information we saw, it actually surprised us: 36% said they had a written succession plan. 74% were saying that they hoped that the next generation of the family would come back to the farm, but that wouldn't be for 10 years for 70% of those folks, and for 35% it's going to be 20 years before they turn over the reins. Let's talk some about that dynamic and how with the older generation, sometimes we talk about grandpa turning over the reins to his 60-year-old son. Talk about some of the dynamics that causes and that delay maybe of deciding the future of the farming operation.

Ron Hanson (06:02):

Well, I agree, Shauna, that 36% is a little bit of a surprising number that they have a plan or a written plan, but my question would be, are those plans up to date? Are they current? Is it something that maybe mom and dad wrote a will 20-some years ago or feed plan for tomorrow, whatever, and it’s been put away taking care of no more worries, but that farming operation has changed dramatically. Their Angus cattle business has changed, the family situation has changed. I always recommend to families if they have a succession plan, transition plan, trust, LLC, whatever it might be, that every three or four years they sit down with their attorney, with their accountant, their CPA, whoever, their consultant, their cattle consultant, you bet cattle, business person, whomever, and review it, go through it and make sure it's exactly what they want. Things are up to date and things are current. It's one thing to have a plan. The other thing, is that workable and feasible in today’s environment?

Shauna Hermel (07:26):

Know government regulations even and things like that, things change,

Ron Hanson (07:31):

Almost change overnight. And family members, farm producers, they're busy with their cattle production. Okay? Yep. That's why you need the outside specialist. You need an attorney, an accountant, a consultant, whatever, who's up to date on the changes and regulations and making sure that everything is in place. And so it's very important to do that. And a lot of 'em, like you mentioned, yeah, we're not going to turn this over in 10 or 20 years. That's just because a lot of producers, I mean, I have met a lot of farm producers that Lord willing would farm forever. Yes, my health, whatever, I'm 74 years old, I can still get out there and do a full day's work. I can still run cattle, I can still do this, whatever. And it's hard when you reach those later years of life to admit that maybe I can do things as well as I used to.

(08:36):

Maybe it's time to start thinking of how do I exit or phase out and the next generation begins to phase in or eventually take over. It's hard to let go. And I see that with a lot of parents who have struggled through the tough of farming, the tough years, cattle prices, you name it. All of your listeners are much aware of this. It's hard to work so hard to build something and then let go of it. And so unfortunately, a lot of parents hang on to too much for too long and then something unexpectedly happens and then boom, we got a family disaster. We got a family dispute. Unfortunately, in some of the families I work with, attorneys and lawyers get involved and next thing you know, you see legal fights over the business or assets or estate. And when those things happen, no one wins. I have been in the courtroom and I've seen what family members have said to each other there, and I've seen family members walk out of that courtroom and probably will never speak to each other again. That's a sad and that's unfortunate. That's a sad day for everyone.

Shauna Hermel (10:00):

Are there things that we can do ahead of time be thinking of to maybe improve that succession plan? A lot of times we think of it as an estate plan, it's really not, right.

Ron Hanson (10:14):

Well, you're absolutely correct. I always point out to an audience, same way with your listeners. A succession plan is what can happen today, what can happen today. You're in charge. It's your plan, your wishes, your intentions, you're in control. An estate plan is what typically happens after you die. And if you don't have things in writing, things spelled out, things documented, somebody else is now in control and the final results may not be exactly what you wanted. So succession planning is very important because it's forward looking. I always remind parents they're the catalyst, they're the starting point. It's their farm, their business, their family, their estate. I always challenge parents, you've worked your whole life to belt and accomplish this. What are you now going to do with it? Do you have a plan? And having that vision, the parents being able to work together and resolve any issues or conflicts or challenges is very important.

(11:35):

Mom and dad are the starting point, okay? And they've got to first of all reach an agreement as to what they want to accomplish together. They've done this as partners through their life and then have a family meeting, bring all the children home and explain their wishes and intentions. That first meeting should just be information sharing only, no decisions to be made. We're just here to share input, share ideas, discuss options. And so everyone has a chance to openly and honestly share their feelings, expectations and make sure that if there's any misunderstanding, now's the time that we can fix it.

Shauna Hermel (12:26):

That first meeting. As far as the scope of what you would cover, I mean is that talking about land and cattle and who's coming in and who's not? Or is that just an awareness of what's there and what mom and dad want?

Ron Hanson (12:42):

I think you're right on target. It's all of the above.

Shauna Hermel (12:45):

Okay.

Ron Hanson (12:46):

It's all of the above, but it's what the parents' wishes are. It's their farm, their estate, they have every right to do with it as they please. I mean, if they wanted to, they could sell part of their farm and give them money to their church, set up an endowment, set up support a charity. I mean, I always, at the university, I taught four lecture classes in the College of Ag and every semester I would take one lecture day and I would walk into the classroom to my ag students. And my first words that day in class, your mom and dad don't owe you a farm. Your parents don't owe you an inheritance. Your parents owe you nothing. And I made my students understand that if they someday are very fortunate to have the chance to return back home to a family, cattle business, whatever it might be, and take over, or if someday they're going to receive a very generous inheritance from their parents because those parents work and sacrifice and save and never spent everything they made back to the farm, everything went back to the farm, to the cattle, to the business, and they have built a very sizable wealthy estate.

(14:16):

But I just made the students understand that that was not an entitlement, not an obligation, but it was the gift of love and caring and generosity. And I always tell my students that if you are fortunate enough to come and blessed to come from a family, you tell those parents how much you love them and how much you appreciate them for everything they've done and the opportunities they've given you. And don't take it for granted on that. And that's a very, very fine line.

(14:55):

I hate, and I apologize for saying this, but one of the things that worries me the most in all my years of working with families, and that's been 40 years plus, is when I look out across rural America today, greed and entitlement have become issues. And you look at what these farms are worth today and what this land can sell for. And so many times when I work with families, I hear the comment, do you know what this farm is worth? Do you know what we could sell this for? Yeah, my brother, my sister worked hard, but they didn't work that hard. And sweat equity many times is overlooked by sometimes the non-farm siblings, the non-farming children, this idea that, well, there's three of us kids in the family. I deserve a third of this. I should have a third. I never worked, I never contributed. I never helped out. But I'm entitled, and I call it the curse of family wealth.

Shauna Hermel (16:15):

That's probably a good description.

Ron Hanson (16:17):

What I love to do with parents, I always tell parents, stop worrying about who's going to get it and how much they get. Whatever. Spend it, enjoy it. If you have a bucket list of things that you always wanted to do, are you going to die with a bucket full or the bucket empty, enjoy your life. You've earned it. You're entitled to it. Just get out there and do the things that you would love to do if you have some dreams, aspirations, we always wanted to take a trip here. We always wanted to go back to the old country, whatever. Okay, do it while your health permit you to do it. Don't wait till you're old and crippled up. And a lot of parents wait till that and now what do I do? And then they sit in a care center staring out a window and dreams are lost.

Shauna Hermel (17:16):

There is, you might call it a fear factor of opening that can of worms and everything's going along good right now. We can just put it off down the road for a couple weeks or a couple months or a couple years. How do you get past that? Or if mom and dad and maybe some of the children are ready to say, okay, well, we'd like to get this settled so that we know what's going to happen in the future. Do you have some tips for how to get the ball rolling?

Ron Hanson (17:50):

Well, you're absolutely correct. A lot of parents procrastinate. A lot of parents are guilty of waiting till next year or someday we'll do this someday. We'll talk about this. And it's a true fact. I mean, most families avoid conflict. Most families avoid conflict and confrontations. And so the real underlying issues, many times never get discussed. Most family disputes never evolve from what was discussed, but most often from what was not discussed not. And as you pointed out correctly, it's so easy to kick the can down the road and we'll deal with this later, but if the issues are there, you've got to have that family meeting. It can be tough, it can be demanding, it can be challenging, it can be emotional, but you've got to be honest, got to be transparent. And if those issues are there, you've got to discuss it and find solutions, find answers, and move ahead.

(19:14):

Problems don't disappear by themselves. No. And succession planning is a journey in life, and it has a lot of obstacles, a lot of fears, a lot of challenges, and it takes a lot of commitment and courage to admit that and family members to work together. But having a vision of the farm always being there, the family always being together as a family is extremely important. Those core values give the family the strength to get through the difficult moments and still be family. And that takes openness and truthfulness and transparency. So many of the families that I work with that have family troubles, family conflicts, family disasters, succession planning, train wrecks are the families where everything is kept private. They have secrets. And when things are never disclosed, that causes doubts and suspicions. If you didn't tell me about this, what else didn't you tell me about?

(20:30):

If I didn't find out about that, what else didn't I find out about? And when you have doubts and suspicions now you lose trust. When family members stop trusting each other, they no longer respect each other because how can you have respect for a person that you can't trust? And when families lose trust and respect, they no longer communicate. And very simply, family troubles, family disputes are just around the corner when families fail just to simply communicate with each other. So family communications is very important. You got to get the family. You got to talk about expectations, hopes, dreams, fears, and be open and honest with each other. It's easier said than done, but you got to do it. And it takes a family with the courage and commitment to make sure that happens.

Shauna Hermel (21:34):

We talk a lot in estate planning about the team that you need to have, but really that first meeting is just family. So it doesn't need any outside influence.

Ron Hanson (21:47):

Yeah, I just think the first meeting should be information sharing. And for the parents to first of all, just basically tell the kids, here's what we've been discussing. We love you children. We are proud of you. You're our family. The last thing we want to ever see happen is for you children not to get along and be a family when we're no longer here with you. Parental influence is very powerful. Most adult children are very careful what they do, what they say, how they behave, particularly when the parents get in their very last years of life. Nobody wants to upset grandma or grandpa, whatever. So they tiptoe around the issues, dance around the issues, never talk about the issues. And so having those tough conversations, if there's issues, let's talk. Let's be honest. And it's tough. I mean, it's tough to sit there and admit that there might be one of the children that if they ever got their hands on the farm, the first thing they do is spend it.

(23:01):

There might be an issue where some of the children might have a problem with alcohol, drugs, abuse. Those are tough issues, and they're there in some families. And when you got a farm or a property or an estate that's at risk and you ignore those issues, you just might be waiting for a tragedy to happen. And so life is complicated and it's tough to be a family, but if a family loves and cares for each other and they have a vision and they have the core values that build the foundation of family support and family caring and family empathy, you can get through a lot of obstacles and still be family.

Shauna Hermel (23:58):

Maybe find some ways to be better family members to each other in the process.

Ron Hanson (24:03):

A lot of times when there's a family tragedy, the family is stronger and closer after it. Tough. I mean, tough to get through it. I mean, I've seen situations where funerals have brought a family closer together, and I've seen situations where funerals have torn a family apart, driven

Shauna Hermel (24:22):

Them apart.

Ron Hanson (24:23):

Oh, because nobody knew what was going to happen or how it was going to happen or what they thought was going to happen, and then boom, they find out something else. So I don't like surprises. I don't like secrets. I see it having too many damaging effects.

Shauna Hermel (24:44):

We talked a little bit before we started our discussion here about some of the things that we need to do to prepare for if a shock does happen. Are all the paperwork in place where the family members, can you elaborate on that a little bit?

Ron Hanson (25:05):

Well, in several ways. First of all, whenever a family, or in this case most often, mom and dad, okay? When you meet with your accountant, when you meet with your farm lender, you meet with your estate planner or attorney, whatever, do your homework. Do your homework. Provide them with an overview of the family, the operation, the business, its history, who's involved, what are their roles? What are their responsibilities? What are their duties? Okay?

Shauna Hermel (25:42):

Should those be written in a journal or should,

Ron Hanson (25:45):

That's fine. I think that's great, but I think it should be shared. I want that. I want those professionals to understand our farm, our family, and where we are. Okay? Make sure that all business and financial documents are current and complete. Alright?

Shauna Hermel (26:07):

Okay.

Ron Hanson (26:08):

And accessible. I am a firm believer in power of attorneys, particularly for the family members that are involved in the farm business because if something would happen to either mom, dad, or both, where they might be incapacitated and couldn't run the business or make decisions, who takes over? Who would pay the bills, who would make the mortgage payment that's coming due next month? Who could sell the cattle? Whatever Those power of attorneys are just a safety net so that the operations can still continue and function and somebody can take over in the interim to make sure they're good. And then just make sure everybody's informed. The key point on that, where those documents are, how those documents can be found. I have a lot of parents that they have these documents, whatever, and then they get hit put away. Nobody can get their hands on, nobody can find them. There's a will, but nobody knows where it is. Yeah, there's a trust, but nobody's ever seen it. Well, what does that accomplish? So that's very important. And then as you begin this journey and succession planning, transition planning is a journey. Keep everybody informed.

Shauna Hermel (27:42):

Those who are coming back to the farm and those who aren't

Ron Hanson (27:45):

Everyone, the whole family. I am a very firm believer in family dynamics, all voices and a family. All voices need to be heard and listened to and understood and respected. Okay? Now, we may not have the same opinion, we may not always agree on things, but it's very important that family members respect that. The feelings and the opinions of others.

Shauna Hermel (28:21):

Everybody has a

Ron Hanson (28:22):

Reason for having, if everybody is criticizing, blaming, pointing the finger, whatever, nothing gets accomplished. And back to family conversations again, when parents and their children all get together to have the family meeting, family talk, family conversation, whatever it might be, I think it's very important for those meeting sessions to have boundaries. Okay? Okay. Talk about the farm as a business. Okay, keep the family the emotions out of it. That's hard. And also make sure the comments are constructive. And when I work with a family, meet with a family, I never allow anyone in the room to say anything negative about anyone else. I don't allow any negativity. I don't allow any blaming. I never allow any finger pointing. If that happens, I'm out of there.

Shauna Hermel (29:29):

Really? How do you stop those cops?

Ron Hanson (29:31):

How do you I just tell families, okay, fine. Very simple. You're mad about something, you're upset about something. Fine. I understand that it happens, but tell me how to fix it. Tell me how to make it better. Look ahead, look at the positive, not back at the negative. And that just gives a family direction that we're going to work together, get along together and be a family together. And that's very important. I mean, when you sit down with the meetings, have an agenda, have a purpose. So everyone knows what we're going to talk about. No surprises. Again, everyone's informed. Everyone has a chance to make an input. Where when family members really get angry and upset is when they're not allowed to share their feelings, their input, they're left out, they're ignored. My feelings don't count. That's when people get really mad and upset. And then someday, okay, let's fight. And so much of this, so many times in families, the conflicts and disputes can actually be resolved if family members just have the right attitude, the right approach, and let the past be the past. How do we start today and make for a better tomorrow? And make that your motive. Make that your goal. How do we start today? And that requires family members to be honest. Forgiveness,

Shauna Hermel (31:14):

That's a big

Ron Hanson (31:15):

Word. Maybe some things have been said that shouldn't have been said. Maybe some things were done that shouldn't have been done, whatever it might be. And it's very hard to, it takes a very strong person. That's the greatest gift in life that you can share with. Another is forgiveness.

Shauna Hermel (31:37):

I agree.

Ron Hanson (31:38):

And if family members have that, that can be a starting point. Alright? Every family will have its moments. You show me a family and Angus cattle business, you show me a family operation in the Angus cattle business that's not had its moments. And I'll show you a family, not normal.

Shauna Hermel (32:01):

I don't think I could

Ron Hanson (32:03):

You show me a husband and wife and a marriage that have not had their moments. And I'll show you two people, not normal. Every relationship has its moments. You can't avoid it. It just happens. And most times it's never the issue that causes the troubles in the conflicts and the family tragedies. It's how they went about the issue. And when you see the blaming, accusing all of the above, instead of working together, we're fighting. And that's when things fall apart really quick.

Shauna Hermel (32:47):

So the tendency might be to say, well, they just have to get it out of their system. Is that not a, I mean you say you don't allow any of that bad behavior within a meeting.

Ron Hanson (32:58):

Do it in a positive manner. It's one thing, just a quick example. It'd be one thing that if I were upset with you and all of a sudden we're sitting there in that family meeting and I attack, well, if you weren't so stupid, if you weren't this, if you, okay, that's the negative attacking side. I've

Shauna Hermel (33:29):

Stopped listening.

Ron Hanson (33:30):

Whatever the moment you do those things, people are on the defense. People automatically are on the defensive. Okay? What you do in tough situations is very simple. The reason I'm upset is because no blaming, no finger pointing. The reason I am disappointed that this happened is because

Shauna Hermel (34:03):

Takes emotion out.

Ron Hanson (34:04):

It just puts it in a positive framework. Yeah, you're spilling your feelings, you're sharing your feelings, but you're being honest.

Shauna Hermel (34:16):

Honest.

Ron Hanson (34:18):

And there's a good way to do it. I mean, just reason I'm upset or reason I have trouble understanding, reason I have trouble getting along is just because, and then share that and share it in a positive manner.

Shauna Hermel (34:34):

There's some of those rules for how to be constructive in your dialogue when you're having a meeting. Are there some of those rules that people can get to give to family members before? Say, we're going to have this meeting to talk about the farm and what we hope for the future, but we want you to look at this so that you come into the discussion with the right frame of mind.

Ron Hanson (35:00):

Yeah, I mean it's letting everybody know what's on the agenda. Let everyone know that when we have this meeting, when we all get together Sunday afternoon after dinner to have this family discussion, whatever it might be, here's the purpose. Here's what we need to discuss. Here's what we need to decide. Here's what we need to evaluate. Alright? No surprises. Don't spring it on somebody. Well, I've already done this. What do you think? You bet this has already happened. What do you think? I've already signed this. What do you think? Well, gosh, I guess it's already done. What am I going to do?

(35:47):

I am just a firm believer of parents meeting with their adult children and discussing things ahead of time and getting input and getting their feelings. If someone's upset about something or might be upset about something, okay, fine. What is it? Let's fix it. Let's deal with it. I've seen too many parents meet with their kids and well, we've been the attorney and we did a trust and we drew this up and we got this signed. What do your kids think? Well, most of the time the kids will just sit back, it's done. It's a done deal. It doesn't matter what they think. Mom and dad have already done it. What are you asking my opinion now for?

(36:33):

And they'll just sit back in silence, not saying anything. What good does it do to speak up now? And so I'm just a firm believer of the parents of the starting point. The parents have to be the catalyst and they've got to direct the conversation and get things in writing. Because when you have things in writing that gives you direction for decision making, it gets expectations and feelings into words, which has a totally different impact. It's one thing to sit around the family dinner table at Christmas and yeah, we're going to farm and we're going to keep farming and the farm's important and we're all happy.

(37:21):

And it's another thing when you've got a real plan in place in writing and spelled out, and that's where families need to be. And I just think it's extremely important that families get things discussed, get things worked out, get things in writing. It's a commitment and you've got to get plans implemented. And because a plan that's never implemented, accomplished is nothing. Plans without deadlines are just hopes and dreams because it is so easy to keep just putting it off, putting it off, and nothing ever happens. And then all of a sudden there's a tragedy, a crisis in the family. And so many times when families come to me during a moment of need or crisis or whatever it might be, the first words are, what do we do now? What do we do now? This happened. We just lost dad from accident, heart attack, divorce, whatever. What do we do now? And if you wait too late in process, a lot of times you have very few options. So I always encourage families, it's never too early to begin planning, but don't wait until it's too late. And that's very important. You have to have, make it a priority. And you have to create a sense of urgency that we need to get things done now and get the planning process started. Now

Shauna Hermel (39:02):

We like to end our Angus At Work podcast with something positive that's happening in your life, whether that's a personal thing or a professional thing. So is there something that you can share with us?

Ron Hanson (39:14):

I'll share with you just two very quick thoughts. The joys in my teaching career at the university, why did I stay for 46 years, my students and seeing my students graduate and be successful, whether they went back to a family farm, a family ranch, professional career, whatever. But just knowing that I was part of that in the classroom, I was tough. I was demanding. I expected the best of my students as they expected the best of me. I've had students say that if I ever came back to the university again, Dr. Hanson, your class would be the first that I'd take. And that's a compliment. That's wonderful. But my students and just being part of their success. And the other thing is knowing that I directly or indirectly have made an impact with families. I get Christmas cards from families that the reason we're still farming today is because of you.

Shauna Hermel (40:31):

That's

Ron Hanson (40:31):

Wonderful. Because of something you said or a piece of advice you shared or a meeting we went to and you spoke and got us thinking, got us off a dead center. Those sorts of things, those relationships are priceless. Are priceless. And looking back and knowing that hopefully I've made a difference and other people's life and helped, has been very important. And my wife, Marilyn, bless her heart, made a huge sacrifice because she gave up a lot of our personal life together that allowed me to do what I had a passion for. And that was my students and my farm families.

Shauna Hermel (41:27):

That's amazing. And you have had a significant contribution to keeping families on the farm for years. So thank you for that. And thank you for joining us. Again, this is Shauna Hermal visiting with Dr. Ron Hansen, and we are timing out on the Angus At Work podcast. So we'll turn it over to Lindsay to wrap us up.

Lynsey McAnally (41:54):

Listeners, for more information on making Angus work for you, check out the Angus B bulletin and the Angus B Bulletin extra. You can subscribe to both publications in the show notes. If you have questions or comments, let us know at ABB editorial@angus.org and we would appreciate it if you would leave us a review on Apple Podcast and share this episode with any other profit minded cattlemen. Thanks for listening. This has been Angus at work.