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Passing down the family farm can be difficult"Your mom and dad don't owe you a farm or inheritance. They owe you nothing. It's an act of generosity for them to pass down the farm,"--Ron Hanson, professor of agribusiness, University of Nebraska-Lincoln. By Jennifer Bremer
Transferring ownership of a family farming operation is never an easy process and can often involve extreme emotional stress, according to Ron Hanson professor of agribusiness at the University of Nebraska-Lincoln. Hanson discussed ways to handle these emotional issues with attendees at the National Agricultural Bankers Conference in Des Moines, recently. "I can talk from experience--46 years ago, I lost a family and a farm over these emotional issues. I just hope I can help others so they don't have to go through this," said Hanson. Hanson stressed the importance of communication among the entire family on issues such as legal issues and ownership succession issues so everyone is in agreement. "Sorting through these things is a major step toward avoiding the personal conflicts and family feuds that often arise during the settlement of a farm estate," he said. Parental influence Hanson said parental influence can be very strong while the parent is alive, even if they are not the one actively involved in farming. "Many parents actually raise their children to be followers and children are often expected to always do what their parents want," he said. "Then when those children are adults, they wonder why they have no drive or ambition." It is better for the adult children to use their own independent thinking to sort through different issues on the farm. He said the dad in the operation often is wearing two hats--"boss" hat and "dad" hat. This can present a difficult task, since dad must know when to wear which hat. "The dad should give praise when a good job is done and children should be treated as employees who are capable of making decisions," he said. Another related issue is when mom outlives dad. At that point, would mom continue to run the family farm just like dad did or would she start making changes she thought dad should have made all along? "Often times, if mom is involved in the operation, little changes are made. But if mom is not very involved, a lot of changes are made," he added. Who is family? Hanson said it is often very important to define who family is in the family farming operation. "Are only the blood relatives considered family when it comes to making business and management decisions, or are the in-laws considered family also?" he asked. Most importantly, Hanson said, family members should communicate among each other to avoid suspicions, lack of respect and trust problems. While some children dream of returning to the family farm, others do not and Hanson warns, "Children who feel obligated to return to the farm often do not want to be there. They should pursue their career interests and dreams elsewhere." Transfer of ownership Ownership of the operation when the parents retire is often a question many don't answer soon enough, according to Hanson. "It is important for everyone to know what is expected and what changes will be made," he said. "Will the children have a chance to gain ownership or will the parents retain total ownership until their death?" The most sensitive issue in transferring ownership can come into play with non-farming children. Hanson said it is hard to discuss because parents often have favorites among their children. To avoid the problems of sibling jealousy, parents must block out their personal feelings of favoritism and devise an estate plan in a fair and equitable manner to all children. "Equitable does not always mean equal. If one child is very involved in the operation and has worked on it for many years, they may be entitled to more of the land in the end," he said. "Also, remember that some children care more about the family farm itself, while others are only interested in how much money they may inherit from the parents' estate." He said it is important for mom and dad to stand together on their decisions and allow the kids to talk about how they feel. However, the children should respect the decisions made by their parents. "Your mom and dad don't owe you a farm or inheritance. They owe you nothing," he said. "It's an act of generosity for them to pass down the farm." Hanson said it is also important for the older generation to realize they need to help the younger generation in the operation gain equity. "Don't hand down the farm to someone who's already retired. That doesn't solve any problems," he said. "It needs handed down to the generation which is actively involved." It's important to remember that situations change and people change. The ownership issues should be discussed prior to crunch time to avoid hard feelings. "Farms can be replaced--families can't," he concluded. Jennifer Bremer can be reached by phone at 515-833-2120, or by e-mail at jbremermaj@hotmail.com. 12/22/08 Date: 12/18/08
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