By SUSAN HAYHURST
Indiana Correspondent

Editor’s note: This is the first article in a series discussing ownership succession planning for family farms.

SPENCER, Ind. — Ron Hanson, a nationally recognized speaker on agribusiness and farm family succession planning, was unabashed and direct when he spoke to farm families at Indiana Farm Bureau’s District 7 seminar on why they must prepare for the future, and for the transference of the family farm.

“I didn’t travel to Indiana to make friends. I traveled to Indiana because I don’t want to see you in my office asking for help,” said Hanson, also the Neal E. Harlan Professor of Agribusiness at the University of Nebraska-Lincoln. “I didn’t travel here for what you want to hear, but to talk about the real facts.

“When transferring the actual ownership of a family farming operation to the next generation (i.e., especially if the farm has been in the family name for several generations), the entire succession process itself can result in a lot of emotional stress among the family members involved.”

His message was fueled by his own family’s experience decades ago. “My life would be completely different if my family had planned and prepared a generation ago,” he explained. “One night and one argument ended everything.

“We lost a farm, I lost 4-H, my life. My dad has never gone to my grandparents’ graves. I never want my children to forget the price paid.”

“There are many issues which confront family members in working through this transition in a reasonable and expedient manner without disturbing the daily operation of the farm business,”

Hanson continued. “These succession issues must eventually be discussed by all the family members involved and resolved to everyone’s agreement, to allow for a successful transition of ownership to the next generation.”
Hanson cited three reasons for such a discussion being difficult: farm families are private people; parents have favorites among their children; and estate plans tend to be kept secret.

“Farmers have always kept their cards close to their chests,” Hanson noted. “’It’s our business and ours only’ is just how they’ve been taught and brought up. Also, there are often favorites where specific children are given things, and then there’s jealousy to deal with.”

“Finally, in regards to estate plans, family members are often told ‘things have been taken care of’ or ‘you’ll know soon enough,’” Hanson said. “I had one family’s adult children in my office telling me their parents were both deceased and that the family combed the house looking for a will.

“They finally found it in a Tupperware container in the bottom of the deep freeze. They realized that Mom and Dad knew one of the kids would eventually find it because they would be cleaning everything out.”

Marty Evans, a grain farmer from Terre Haute, attended the seminar with his wife, Becky, and their adult children and their spouses. The Evanses are first-generation farmers wanting to find ways to pass the farm onto the next generation.

“We’ve been fortunate to farm and it’s been a mission for us for 10 years to learn about the planning, to try to stay on top of tax laws and keep revising the issues,” Evans said. “We have worked at keeping the kids engaged in such discussions; they understand the importance of it. This planning for the future has not been a secret in our family.”

The succession of the farm is usually weighted in a control issue, that of the role of the father, according to Hanson. Passing ownership is one issue, but sharing control is another, often with strings attached.

“Remember that Dad is wearing two hats in the family farm operation – the boss hat and the Dad hat,” Hanson explained.

“When wearing the boss hat, Dad is in charge (authoritative power) and supervises the adult children as employees in the farming operation.

“When wearing the Dad hat, the father is understanding and takes time to listen to the concerns of the children. Dad is more relaxed and willing to spend time visiting about family matters.”

Wearing two hats presents a difficult situation for any father, since he must know when to be in which role, said Hanson. “Dad may even have to change hats several times during the same day. The adult children working on the family farm must make this distinction between the boss and Dad roles that the father plays in the farm business.

“When things go wrong on the farm or someone makes a big mistake, the father will become upset. He is then wearing the boss hat. He still loves his adult children, but is disappointed with their work performance in the farming operation. Dad needs to correct mistakes in a positive manner that builds confidence in his adult children.”

Also in the Dad role, says Hanson, he must be certain to compliment adult children when they do a good job. If Dad only criticizes and points out the mistakes, a negative working environment soon develops between him and his adult children.

“This issue can actually lead to more serious problems in the family,” Hanson warns. “Too many times an adult child will go back to the family farm to begin their start in farming, perhaps after graduating from college or working another job. Dad has to be careful to treat this farming son or farming daughter as an adult capable of making decisions and providing their own ideas.

“If Dad wears only his boss hat, the adult child may feel they are only hired help, with no opportunity for management input. As a result, the adult children soon lose interest in the farm itself and have little motivation to be successful in the operation.”

Hanson reminded fathers to be compassionate and wise in handling such delicate situations, and advised adult children to be aware “Dad versus boss” will occur.

The urgency with which the professor addressed farm succession planning made an indelible mark on Evans. “In going to Hanson’s seminar I thought we were going to learn ways to do future planning or sidestep tax difficulties,” he said. “Instead, I heard the urgency in Hanson’s voice to get started and keep working at it harder than we had in the past. Tragedies happen, and we just have to be prepared.

“I realized we had talked about many things at home but not written them down. Now we must do that. The kids were extremely pleased they attended and participated. My only disappointment is that I didn’t invite more friends to go with us.”