I don’t go shopping often but when I do, my decisions are easy. I know exactly what I want to buy. I have my list and I get in and out of there. Now my son makes many of the farm purchases online and my wife gets most of my clothes online. That is perfect for how I make decisions because I just get what I need and it's consistent with my goals.
So how do you make decisions for your farm?
With estate planning, I have observed times where election results or major law changes could affect estate planning both positively and negatively. Sometimes in anticipation of potential changes, people have made dramatic decisions that they later regret. Here are some examples:
This first is in regard to estate taxes. Several times I have seen people “give away” the farm to their children in fear of a lower federal estate tax limit that ended up not happening. Sometimes giving away the farm was not a problem because that was the plan anyhow, but other times they later wished they had not done that. Was the decision made in fear?
As people get older or near their next birthday, I have seen them purchase life insurance very quickly without a plan simply because they were getting old. The insurance guy the stopped by and got them to purchase the insurance because he scared them about rising premium costs as they got older. Wow, was getting older a surprise? It happens every day. Was the decision made in fear?
When someone has their own health challenge or observes a friend or family member in the nursing home, they decide they should give away the farm now or get some long term care insurance. Giving away the farm seems too drastic but some guy drives up showing them a list of neighbors that recently bought the long term care policies he was selling. Next thing you know you are buying some long term care insurance without knowing how it all works. Was the decision was made in fear?
I have seen people refrain from giving assets to a certain child or keeping those assets in a trust to avoid an obnoxious in-laws from ever being able to touch those farm assets. They feared the money-hungry spend-aholic in-law would stick around until they had land in hand and then leave. They say, “There is no way we are letting them ever get our land,” therefore they tie everything up to avoid that happening. Was the decision made in fear?
I have seen people hate income taxes and as a result they buy machinery that they don’t need at the end of the year. They didn’t really have the money for it, but getting another loan for machinery was better than getting a loan to pay taxes. Was the decision made in fear?
The point is this: How do you make decisions? Do you have a logical, thought-through, comprehensive plan in place? Are your decisions based on how things fit into that plan?
Or is each decision based on the next crisis that is right in front of you at that moment? Does your plan look like a series of fear-based reactions that were reactively made? Or does your plan appear to have a pro-active strategy?
As you read this, we will likely be finding out how things may look the next few years. Could that result in another reactionary decision you make in fear? Don’t get me wrong — some of the above examples do make sense, and fear can be a motivator. In a best-case scenario, your plan is a reflection of decisionmaking that helps you accomplish your goals, not just a plan to address your fears.
Myron Friesen is the co-owner of Farm Financial Strategies Inc. in Osage, Iowa. He can be contacted at 866-524-3636 or firstname.lastname@example.org.