Farm Succession Planning Explained: The First Steps Every Farm Family Should Take

Folks, I don't wanna bring anyone down, and I don't wanna treat On Life & Land as my own personal outlet, but I do feel like this story is relevant to the topic we're talking through today.

After my dad, may he rest in peace, had worked for a big corporation for the last fifteen years or so of his career, his employer made him an early retirement offer.

Dad was set to receive a modest amount of money in a lump sum.

Nothing that was gonna make him rich, but still a decent amount.

Certainly nothing that you or I would turn down.

He called me and asked for my thoughts on what he should do with that payout and more generally with his financial arrangements.

It was the first time to my recollection that he had ever asked me for financial advice.

Now, I don't have any sort of training or certification in finance, and Dad obviously knew that.

But he also knew that I'd managed our own retirement savings pretty well, and he wanted my take on any pitfalls he should avoid.

He wanted to pass on to me and my sister as much as he reasonably could, of course, after making sure his own needs were taken care of.

So I gave him my opinions, my best advice, and I gave him those opinions in the form of, "Okay, if you go generally this way, you can do this thing, and if you go generally that way, you can do that other thing.

But no matter which way you decide to go, here's a couple of things you absolutely should do and a couple you should not do, and here's why." And I went through what I understood of the legal and tax ramifications of what I was advising him to do and not do, ramifications which were not insignificant.

Now, fast-forward not even two years.

Dad unfortunately has received a terminal cancer diagnosis, and he was going downhill very quickly.

He was incapacitated, needed in-home care immediately, followed by hospice, and this is the moment when I find out that not only had he not done much of what I'd advised him to do, he had done exactly to the letter what I'd advised him not to do with regard to his retirement income and his day-to-day finances.

The end result is exactly what I told him would happen.

Despite the fact that he had money in the bank, that money at that moment was inaccessible to us, meaning that while we were still trying to process the impending loss of our father, my sister and I had to work with attorneys, doctors, the courts, and the bank to gain access to his accounts.

And while that was getting resolved, it was Mrs. Jones and I personally who were paying every cent of every bill of his that came due.

Once he was gone, if you can imagine it, the situation only got worse.

Expenses associated with his in-home care had taken much of his liquid cash, and the money in his retirement accounts had not been available to us.

So again, we'd been writing checks that were draining our own savings, but due in large part to the way he'd set up his retirement accounts, that money would be considered taxable if we withdrew it to repay ourselves the thousands and thousands of dollars we had spent on his behalf.

Folks, if it sounds like I'm beating up on someone who's not here to defend himself, that's absolutely not my intent.

Dad deserves a lot of credit for at least having the conversation, but the fact remains, because of where and how his money was parked, my sister and I each received no more than seventy, maybe seventy-five percent of what we would have had he taken my advice.

Now, I'm sure Dad's arrangements were expedient when he made them.

They allowed him to check a major task off his list, always a big deal for Dad, and there was nothing nefarious on his or anyone else's part.