Discussions about passing on the farm should occur while family is still alive
March 1, 2018
Bertha inherited a retirement plan that was in her husband's head. When her husband died, she was left with a farm that was cash rented to a young farmer that her husband treated like a son.
Despite having a valuable asset, Bertha lived in near poverty because her husband had given the young man a tremendous break in the rental price for the farm. One day, the young man came driving into Bertha's yard in a brand new, decked-out pickup truck that wasn't even designed to be used on the farm. Barely able to make her bills, Bertha knew things needed to change.
Ruth Hambleton, who founded Annie's Project, told more than 300 women at the Nebraska Women in Agriculture conference in Kearney, Neb., that variations of this same story seem to happen over and over again to widows who inherit the family farms and ranches after their husbands' death.
Annie's Project, which was named in honor of Hambleton's mother, who passed away in 1997, is a way to empower farm and ranch women to understand and accept life, and the role they play in it. "Annie's Project has taught me that the No. 1 concern women worry about is the debt load their farms and ranches carry," she said. "Conferences like this one have a big impact on women's lives. It helps them deal with situations that come up."
In Bertha's situation, she sought experienced help to develop a written cash lease with a new cash rent amount listed that was double what her tenant had been paying. "Her renter was not happy, but it isn't her job to make him happy," Hambleton told the women. "What it gave her was comfort. Now there was a piece of paper between them."
Hambleton's message to women in this situation is to get everything in writing. "I came from a part of Illinois where business was done with a handshake. A handshake is actually legally binding in that state," she said.
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At one conference, Hambleton gave all the landowners a homework assignment to develop a lease. "All the lady landowners came back with signed written leases," she said. "The husbands' argument was, 'I can't take that to my leaser. He would think I don't trust him."
"The message here is that we can't solve everything in farm management. Sometimes, we may just need to step back and accept what you can do nothing about," she said.
INHERITING THE FARM — NOW WHAT?
Nearly 50 women at the conference attended a break-out session on what to do when they inherit the family farm. Allan Vyhnalek, who is an Extension educator specializing in farm succession and transition, said they will need to determine what the land is worth by looking at data like Nebraska land values or having it appraised. "A value will be assigned to the land, and that will be your basis," he said. "Upon death, the children will get the basis of what it is worth at that time."
Vyhnalek said the family needs to have a plan for the land while all parties are still alive. "Communication is important to maintain family relationships," he said. When estate plans are not shared prior to death it can create hard feelings and life-long damage to family relationships.
In one family, Vyhnalek said the parents had two quarters of irrigated farm ground and two farming sons. The estate plan was to give each son one quarter. When the parents passed, dissension occurred between the sons because each quarter had a significantly different value, and it wasn't specified which son got which quarter. "The brothers got into a dispute, and now they no longer talk to each other," he said.
During estate planning, Vyhnalek said the goal should be to hold the family together. "Don't make an assumption that they will work it out because they always did in the past. Get a commitment," he said. "The best way to do that is to be open and clear with communications, and put all the options on the table."
Vyhnalek said there are always questions about which family members should participate in the discussion. "I think the conversation should include grandma, grandpa, their children, any adult grandchildren and the spouses," he said. "Everyone who comes to the meeting should be willing to share their ideas." He said off-farm family should also be included.
The family meeting should be held in a neutral location, not during a family holiday, or at grandma's kitchen table where there is a pecking order. Vyhnalek also recommended recording the meeting, taking notes and being willing to have more than one meeting. Once a decision is made, Vyhnalek warned against bringing it up again.
Determining how to treat each party fairly can also be a challenge. "Is the on-farm sibling being treated fairly? Have they been fairly treated for the sweat equity that they have contributed? Honest evaluation of this is key," Vyhnalek said. "Avoid feelings of entitlement and mistrust. Also, it is important to realize that each siblings perception of input may be different, depending if they were an on-farm or off-farm sibling," he said. "It is important to keep an open mind, and hear and consider both sides."
— Clark is a freelance livestock journalist from western Nebraska. She can be reached by email at firstname.lastname@example.org.