The Past, the Present, and the Future walked into a bar. It was tense.

If you laughed at that, you might just be a geek. Like me.

Actually, I am a geek on many levels. I study nature. I devour books on theology, the history of inventions, and enjoy learning about scientific discoveries. But it gets worse. I am an enthusiast for life insurance.

I also like learning about things I will likely never do.

It was therefore pure bliss when, recently, while reading about the maple syrup industry, I coincidentally found the obvious need for life insurance, estate planning, and succession planning!

The Story (Abridged) of Maple Syrup Production
In 2014 the author Douglas Whynott published “The Sugar Season: A Year in the Life of Maple Syrup, and One Family’s Quest for the Sweet Harvest.” It is an excellent book!

Whynott explains that the process of making maple syrup is elemental. All it takes are trees and sap, fire and water, wood, steam, and smoke.

Maple trees react to temperature changes in late winter by heaving sap up their trunks. Maple sap is xylem sap, and it contains small quantities of sugar. In late winter, the tree’s root system draws nutrients such as dissolved minerals from the soil. This becomes the xylem sap that carries these nutrients from the soil to the leaves. When it is absorbed by the leaves the water is lost through transpiration.

For sap to flow, temperatures must fall below freezing (usually at night) and rise above freezing (usually during the day). The season typically lasts 4-6 weeks and ends when temperatures remain above freezing and buds begin to break dormancy.

Late winter’s sunny days in New England and Eastern Canada cause the temperature to rise from below freezing to above 40-50 degrees Fahrenheit. This sunlight-induced temperature change causes the trees to be “shocked.” The extent of the shock is directly proportional to the rate of the sap’s flow. The best results usually follow long, cold winters.

The process of making maple syrup begins by tapping the trees. In late January, February, and as late as March, workers drill holes, drive spouts, and then either affix buckets (traditional) or insert tubes (modern). Drill bits used in tapping are quarter inch in diameter. The spouts are tapped into the hole. Three taps are just right. Four is too many. The tubes are eighteen inches long and referred to as a “dropline.”

A single tap hole could ideally yield 40+ gallons of sap in a season; however, a more typical average is between 5-15 gallons. Sugar content of the sap varies widely among individual trees, but generally averages two to three percent. A hydrometer is used to measure sugar content.

It takes approximately 40 gallons of sap to yield one gallon (assuming 2.5 percent sugar) of maple syrup. Sugar maple (Acer saccharum) is the primary species targeted. Maple syrup is sold by the pound on the bulk market, rather than by the gallon. There are eleven pounds in a gallon.

On March 2, 2015, the USDA published the United States Standards for Grades of maple syrup. Section 52.5964 addressed the importance of Color in grading syrup. Maple Syrup can only be one of four grades—Golden, Amber, Dark or Very Dark. The color is defined as “the percent of light transmission through the syrup as measured with a spectrophotometer using matched square optical cells having a 10mm light path at a wavelength of 560 nm. The color value is expressed as percent of light transmission as compared to analytical reagent glycerol fixed at 100 percent. Percent transmission is symbolized by ‘%Tc.’”¹

• Golden—is the lightest color and is usually associated with the first sap flows during the sugaring season and offers a delicate flavor and lightest color. It often has hints of vanilla.
• Amber—is slightly darker than Golden with a light amber color and a rich, full-bodied maple taste of medium intensity.
• Dark—has a robust flavor that is more pronounced than Amber syrup and has a dark amber color.
• Very Dark—is the darkest of all the grades and has a very intense maple flavor. Consumers like the strong flavors of maple associated with this grade.

Syrup Gets in the Blood
Native Americans have a long history of producing maple sugar, a tradition which was adopted by early settlers. Over the last two hundred years maple syrup has become big business. In 2021, the United States produced 3.42 million gallons of maple syrup. In 2020 (excluding Vermont) there were 7,360,000 trees tapped in the United States. Vermont alone had 6,150,000.²

In 2021 these five states led the country in maple syrup production:³

• Vermont: 5,900,000 taps
• New York: 2,900,000 taps
• Maine: 1,890,000 taps
• Pennsylvania: 715,000 taps
• New Hampshire: 530,000 taps

In 2017 the United States was home to an estimated 9,492 maple farms.⁴ Like those in the other leading states, most VT producers are small, independent makers with an average of 3,451 taps that produce 1,221 gallons of syrup.⁵

Key players in the market as identified by Market Research Future in their Global Maple Syrup Market Research Report include multigenerational family farms working with local sugar makers to procure maple syrup.⁶

Tip: According to Manta.com (a great prospecting tool) there are “488 results matching ‘Maple Syrup Manufacturers’ near Burlington, Vermont.”

Children on these family farms grow up tapping trees in knee-deep snow, chopping wood for the fires, tending to the tasks of boiling, and bottling the syrup, and greeting customers. They spend their youth in and among the trees and absorb the magic of steam curling over the roof, sparks rising into the night sky, the scent of wood, the sweetness of the sap, and the character of a family farm.

In his book, Douglas Whynot chronicles one particular family with the surname Bascom.

Succession Planning Gets Sticky
The Bascom family has been producing maple syrup since 1853. Over seven generations propelled Bascom Maple Farms to current day. These multiple generations of people all had deep affection for maple syrup. James Bascom was a clever farmer who made a light-colored maple syrup in the 1800s. His son Eric attended theological school in Maine, where he met his wife, Elda Frost. After they married, they gave birth to a son named Ken. Both Eric and Elda were ordained ministers. In the late 1920s Eric bought Stone House Farm on Mount Kingsbury near Acworth, New Hampshire. The purchase price was $2,500, and Eric paid $30 per month to the widow who owned it.

Eric ministered to a church in Canterbury until the Great Depression made it difficult for congregations to afford ministers. That is when he turned to full-time farming. At first, Eric raised chickens, grew potatoes, and started a herd of dairy cattle. In addition, he tapped maple trees. Eric’s son Ken was thirteen when the family moved onto the farm permanently.

In 1942 the Bascoms made 600 gallons of syrup. Ken bought the farm from his dad in 1950 for $25,000. Eric and Elda returned to ministry. Ken and his wife Ruth built a new house on the farm and named it “Happiness Lodge.” He began marketing “Happiness Lodge Maple Products.”

Four children came along: Bruce, Nancy, Brad, and Judy. Bruce, the oldest, had a bad stutter growing up. This defined his childhood and resulted in a lack of confidence. He worked constantly beside his dad. “Ken would stand in front of Bruce waiting for him to get the words out and sometimes walk away before he did.”⁷ Bruce remembers his childhood as a time when he stood in the shadows trying to get out a complete sentence.

Ken was a man who yelled a lot, fired people often and quickly, was generally a tyrant to work for, and had no patience for managing people. Ken and Bruce fought. And then fought some more.

“In 1979 they drew up a partnership agreement by which Ken would sell the business to Bruce in 1989, under a financing agreement with interest.”⁸ While Ken focused on production, Bruce paid attention to profit. He developed great business acumen and his confidence grew.
Back in 1954, Ken Bascom hung 3,900 buckets and made 825 gallons of syrup. That grew to 6,900 buckets and 2,090 gallons in 1964. By the year 2000, the Bascoms produced 11,212 gallons of syrup from 35,000 taps.

Morten Bennedsen is professor of family enterprise at INSEAD and the academic director of the Wendel International Centre for Family Enterprise. He wrote, ^{“Too many business successions happen by heart attack. If you don’t plan and if the founder doesn’t want to speak about these things, ultimately nature will make the transition, and in the worst possible way.”9}

In 2005 Ken Bascom was diagnosed with stomach cancer. Before he died, his brother Paul asked him what it had been like to work all these years with Bruce. He said, “Have you ever been on a runaway horse?”¹⁰ Bascom Maple Farms now had one owner (Bruce), and he had become a force in the Maple Syrup Industry.

Bruce Bascom turned 60 in 2010. That year he expanded his operations by adding a huge new building. The cooler alone (the basement) was 100 feet wide and 210 feet long and contained 294,000-cubic-feet of refrigeration space, enough to hold 8 million pounds of syrup. He said, “My retirement will be spent paying for this new building.” Then he added, “The future is my biggest problem.”¹¹

He did not have offspring coming into the business, had no successor in the business, and had no plan for what would happen to the business if he died.

Bruce admitted that he had grown the business beyond his ability to manage it. He did not believe he could find the necessary tiers of people who would be motivated enough to make everything run smoothly.

“If I die, no telling what will happen. They’ll (his family) have to sell off parts of it.”¹²

Attention Independent Financial Professionals
Family businesses are hives of underlying, unspoken emotionality. Business decisions are not just business decisions but hopes and dreams of a legacy generation. Difficult things go on in family businesses like coercion, harassment, and manipulation. They are a hot mess filled with both promise and a sense of entitlement.

Every family business’s succession plan reflects the uniqueness of the family dynamics. Not every business owner wants to transition their business in the same way or at the same time. Some owners want to exit completely at a certain date. Others want to stay involved to a lesser degree over time but never exit entirely. These issues, as well as many others, must be considered.

Point: Without your help family businesses may not have a plan or achieve successful transition from one generation to the next.

With your assistance, families can address succession planning with reasonable care. The topics to discuss include:

• Anticipated timing
• Successor(s) identification
• Process for valuing the business
• Clear steps for implementing the plan
• Decisions regarding funding
• A plan for communicating with employees, customers, and other family
• Tax planning
• Contingency planning

Succession planning actually has two parts—the legal plan (written by an attorney) and the funding. One popular funding source is to use a life insurance policy to fund the transfer.

Tip: Here are some important questions to ask when meeting with the owners of a family business:

• Do you have a written succession plan in place?
• If yes: How is it funded? If no: Are you content knowing that your family will feud and fight?
• Wouldn’t you like to know today what will happen to the business if something happens to one of the owners?
• Are all the children going to be involved with the operation of the business if something happens to you?
• Does it make sense to transfer business ownership to children with no interest in the business?
• Do you want to treat your children equally or equitably?

Summary
The primary purpose of succession planning is to maintain ownership and operations within the family and the management/ownership team. Without a proper plan there is no way to prevent interference from the exiting owner’s other family members. Planning, preparation, and funding are needed in order to provide liquidity to pay estate taxes/retirement and avoid disputes with the exiting owner’s family regarding succession and value.

With your help, family businesses can achieve a smooth transition to the next generation.

The past, the present, and the future walk into your office. They represent three generations of a family business. Are you prepared to help them?

Footnotes:

1. https://www.ams.usda.gov/sites/default/files/media/MapleSyrupStandards. pdf.
2. https://www.uvm.edu/extension/agriculture/maple-statistics.
3. https://www.nass.usda.gov/Statistics_by_State/New_England_includes/Publications/Current_News_Release/2021/Northeastern%20Region%202021%20Maple%20Syrup%20Report.pdf.
4. “2017 Census of Agriculture,” Volume 1, Geographic Area Series, Part 51 (United States Department of Agriculture, National Agricultural Statistics Service, April 2019), https://www.nass.usda.gov/Publications/AgCensus/2017/Full_Report/Volume_1,_Chapter_1_US/usv1.pdf.
5. Ibid.
6. “Maple Syrup Market Research Report- Forecast to 2023 | MRFR,” accessed August 23, 2019, https://www.marketresearchfuture.com/reports/maple-syrup-market-4944.
7. “The Sugar Season: A Year in the Life of Maple Syrup, and One Family’s Quest for the Sweetest Harvest,” by Douglas Whynot, Da Capo Press; Illustrated edition (March 4, 2014), Boston, Massachusetts.
8. Ibid.
9. https://www.cnbc.com/2021/11/14/the-real-life-family-business-drama-not-on-hbos-succession.html.
10. “The Sugar Season,” by Douglas Whynot, page 80.
11. Ibid. Page 35.
12. Ibid. Page 120.