March/April 2024 - 24

Why do most succession plans fail?
n our previous articles we've explored the
importance of planning, and why every operation
needs two separate succession plans. But even
operations that have plans in place sometimes fail to
transfer to the next generation. Why is that?
For decades, conventional wisdom held that succession
plans failed because of economic or environmental
reasons: Taxes, particularly estate taxes. The challenge
of providing a " fair " inheritance to all the children -
those in the operation and those off-farm. Poor financial
management. Too much leverage, coupled with a bad
crop, or an ill-timed decision to " diversify " into new crops
like hemp or barley.
Yet an MIT/Johns Hopkins study determined that 60%
of failed succession plans were due to a breakdown of
trust and communications within the family. Another 25%
of the failures were caused by failure to prepare heirs
to lead the business, while 12% were due to a failure of
mission or vision. Only 3% of the failures were due to
a poorly designed plan. (Source: Williams and Preisser
Preparing Heirs: Five Steps to a Successful Transition of
Family Wealth and Values).
Trust and communication
We've witnessed trust and communication issues with
the clients we serve. Perhaps you have as well? Maybe
even in your own family or a neighboring farm?
Often, Dad is a stoic individual, and not a particularly
good communicator. He's happier in the cab of his combine
than in a meeting. Clients' children often tell us: " We're
frustrated. Dad won't tell us 'the plan.' Or even if there is
a plan! When will he step aside or scale back and give us a
chance? When will he feel we will be ready? What do we
have to do to get there? Which of us will run the operation
when he's gone? What will the other siblings' roles be? "
We've also seen sibling rivalry and friction, sometimes
stemming from perceived slights dating back to high
school. Occasionally, there is a perception that one of the
children is getting preferential treatment. Dad's always
managed to keep a lid on the pot, but will it boil over
when he's longer at the helm?
We've seen situations where a son-in-law or daughterin-law
who didn't grow up in a farm family has
understandable concern about their future financial
security. Not knowing what " the plan " is can cause

March/April 2024

Table of Contents for the Digital Edition of March/April 2024

Editor's Letter
The blight phase of Botryosphaeria diseases in nut crops of California
Tree nut outlook for 2024
From the top
Water stress
Buzz pollination
Hazelnut crop concerns
Almond Board of California
Ad Index
March/April 2024 - 1
March/April 2024 - 2
March/April 2024 - 3
March/April 2024 - Editor's Letter
March/April 2024 - 5
March/April 2024 - The blight phase of Botryosphaeria diseases in nut crops of California
March/April 2024 - 7
March/April 2024 - 8
March/April 2024 - 9
March/April 2024 - Tree nut outlook for 2024
March/April 2024 - 11
March/April 2024 - 12
March/April 2024 - 13
March/April 2024 - From the top
March/April 2024 - 15
March/April 2024 - 16
March/April 2024 - 17
March/April 2024 - Water stress
March/April 2024 - 19
March/April 2024 - Buzz pollination
March/April 2024 - 21
March/April 2024 - Hazelnut crop concerns
March/April 2024 - 23
March/April 2024 - Business
March/April 2024 - 25
March/April 2024 - Almond Board of California
March/April 2024 - Events
March/April 2024 - 28