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Woodbury: Business Mattters   02/04 06:15

   Ties That Bind

   Shared values strengthen the bond between heirs and assure a longer-lasting 
business.

By Lance Woodbury
DTN Farm Business Adviser

   Estate planning, on the surface, has two primary goals -- transferring 
wealth and minimizing taxes. Both are important to agricultural families, as 
the high cost of land and equipment can be a barrier to entering a farming or 
ranching business. Additionally, a large estate tax liability can erode the 
equity built over generations, if assets must be sold to pay tax.

   At a deeper level, however, estate planning serves another meaningful 
purpose. It can enhance the ties that bind heirs together. In my conversations 
with business owners, I often hear them express a desire to create something 
beyond financial significance with their planning efforts. They recognize that 
passing assets such as land, equipment and cash to the next generation is 
important, yet insufficient, to create or nurture strong bonds between family 
members. 

   We've all heard of siblings who inherited land, but then fought incessantly 
and eventually sold it. Or we know of family members who, in only a couple of 
years, exhaust the wealth accumulated over decades. Or we see heirs who can't 
make the adjustment from being siblings to being partners in business with one 
another, and their once-positive relationship deteriorates. How can you avoid 
these scenarios? By cultivating the following two non-financial principles that 
will enhance the ties between generations, siblings and cousins for the future.

   SHARED VALUES

   A successful estate plan fosters shared values, and those values form the 
foundation of a successful business partnership. Such values reflect our most 
deeply held beliefs about the world and our interaction in it, serving as 
guideposts along the path of family business growth. When values don't match, 
conflict more easily emerges.

   Values show up in all kinds of day-to-day business decisions. For example, 
the value of stewardship is demonstrated in decisions about land and facility 
improvements. Financial values emerge in discussions about crop or livestock 
marketing, or equipment purchases. How you value the people who work for you is 
evident in your supervisory relationship, your human resource policies, 
compensation and benefits. 

   Values are also demonstrated in the events and stories that have shaped the 
family and business. Homesteading, survival in the 1930s or 1980s, off-farm 
jobs, weather or market events, family tragedy or success -- your family's 
values are apparent in all of these events, which is why it's important to 
tell, and retell, those stories.

   SHARED VISION

   A successful estate plan embodies a shared vision among family members or 
business partners. For example, many family business partners believe that 
keeping their capital together provides a better life for all of them. Other 
families I know share a vision of making a contribution to society by producing 
food. Another family believes that working together encourages strong family 
relationships, while another believes their family business is the best place 
to foster an entrepreneurial spirit. 

   In all of these examples, the family shares a common view of where they are 
headed. They are in agreement, at a high level, of what they want to 
accomplish. Sure, at times there are disagreements on the details and tactics 
of getting there. But the shared vision keeps them motivated to work through 
disagreements and train the next generation.

   As a family in business, take time to articulate the values that have shaped 
your organization. Discuss your vision for the future with your heirs or 
business partners, and encourage them to participate by sharing theirs. It 
costs very little to have these discussions -- mostly time. But the ties 
between family members can be immensely strengthened with the investment, and 
your estate planning process will likewise be enhanced.

   ** 

   Editor's Note: Lance Woodbury writes family business columns for both DTN 
and our sister magazine, "The Progressive Farmer." He is a Garden City, Kansas, 
author, consultant and professional mediator with more than 20 years of 
experience specializing in agriculture and closely-held businesses. Email 
questions for this column to Lance@agprogress.com. 





(MZT/CZ)

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