Fourth-generation grower Chris Pawelski understands firsthand the struggles of transitioning his family’s farm from one generation to the next. Thankfully, Pawelski’s family made the tough decision to put the family farm in a trust. Pawelski returned to the “Tip of the Iceberg” to talk about why it’s so important for families to talk about succession plans before they’re needed.
Pawelski said his family chose New York FarmNet, a Cornell University-based program that offers support and assistance to farmers in the state, to help with the farm transition and protect his family’s assets. He said Pawelski and his family saw firsthand that family farms in the Hudson Valley cope with losing assets when a key family member could no longer run the family farm.
Pawelski said many farm families wait until it’s too late because talking about succession plans means having difficult conversations.
“People don’t like to think about it,” he said. “People don’t like to think about the fact that we grow old, and we die, and things move on. You have to plan for that, and it’s something you don’t want to think about because sometimes you’ll carry the illusion that if you don’t think about it can’t happen, but it is going to happen.”
But, as the Pawelskis created a farm trust, Chris said his father remained in charge and the law firm his family worked with enacted protections to ensure nothing changed in terms of decision-making. And Pawelski said his parents saw firsthand what happened when other farming families lost assets when the decision-maker or owner went on Medicaid, so he said his parents understood the objectives of transitioning the farm into a farm trust.
“My dad was in the driver’s seat and until the day he died, that didn’t change,” he said. “Even during his sickness, when he was diagnosed with cancer through those six months, he still made the decisions.”
And Pawelski said his mother was also diagnosed with dementia before his father died, and when the family eventually applied to Medicaid, the farm needed to already be in a farm trust.
“You have to get rid of a lot of your assets, and there’s a five-year look back,” he said. “You want to start working on [a farm transition] now because under the federal rules for us getting our Medicaid application, there’s a five-year look back.”
Which, Pawelski said, thankfully, the family had put the farm into a farm trust 13 years before the family needed to.
“It’s difficult, but it’s a conversation you have to have now. You have to start working on now, today,” he said. “The sooner the better. It costs some money and a lawyer to set it up and such, but it’s money well spent, and it’s very much worth it.”
As for the next generation hoping to take over family farms? Pawelski said it’s important that farming is profitable, otherwise the next generation won’t want to come back to the family farm. He said one of his children enjoyed working on the farm, but saw how much he and his wife struggled, especially in down years, and wanted to make a decent living in a career. If there were protections to support farmers better in from natural disasters and to help earn a decent living, more young people might want to make a career in farming.
“I think that’s a main reason why the next generation is not going into [farming],” he said. “Why would you go into something where you see how hard your family works and you know how much risk they take and sometimes losses they have and then have nothing to show for it at the end. It’s totally understandable why they wouldn’t want to go into it.”
