By SUSAN HAYHURST
Indiana Correspondent

Editor’s Note: This is the second article in a series discussing ownership succession for family farms.

SPENCER, Ind. — Who will be the next generation of family farmers? This is one of the greatest challenges now facing agriculture, according to Ron Hanson, Neal Harlan Professor of Agribusiness at the University of Nebraska-Lincoln.

“Who will end up owning your family farm? The person who has it today may not be the person who ends up with it, but such an issue can be resolved through decisive and sound planning by today’s farm families,” said Hanson during a presentation on ownership succession planning during the Indiana Farm Bureau’s recent District 7 seminar and summer picnic.

“It all starts with the family. Without a home base, farm families, and especially the kids, are unlikely to return or consider returning.”

Farms often carry a deep legacy or heritage and the legacy is often rooted in who started the farm, Hanson said. “Is the farm mine? Ours? His? The family’s? You’ll hear farm families reference the farm as ‘Grandpa’s,’ or the barn as ‘Grandpa’s barn.’

“Often the oldest living male, such as the father, usually does most of the talking if the family is meeting in my office. He refers to the farm and its things as ‘my,’ or ‘mine.’ Mom usually doesn’t say much. When I bring the wife into the conversation she usually says the farm is ‘his.’”

Several succession issues may arise, according to Hanson. First, succession must be discussed by all family members.

“When a family farm has been in a family for several generations, the entire succession process will result in a lot of emotional stress. Family members must be involved and then resolved to be in agreement to allow for a successful transition of farm ownership to the next generation,” stressed Hanson.

“Also, very seldom do kids want to upset their parents, so some issues just don’t get discussed while parents are alive. The top two difficult issues to talk about are money and property. I can’t find anything that puts family values to the test (more) than money and property.”

Just who is family, Hanson said, is a question that mirrors parents’ biggest concern. “The number-one fear of the parents is that their son will come home with a new wife, they’ll be divorced in the future and (she’ll) take half the farm with her. So who are the ‘real family members’ in the farm family business?

“Are only the blood-related members the ones to be included in financial or business decisions, have management authority or even the chance for farm ownership, or are in-laws given a voice rather than being kept in the dark or excluded?

“Relationships of trust between family members fail when someone finds out that decisions are being made by others that impacts their well-being and future happiness, but they are not allowed to be a part of that decision. This situation leads to suspicions and a lack of trust for others, which can additionally lead to more upheaval in the family,” cautioned Hanson.

He also asks families to consider what happens if Mom outlives Dad and takes over the family farm. He said the operation’s dynamic may or may not shift, depending on how active the wife has been in the farm’s daily activities.

“If the children live far away, they may encourage Mom to ‘just sell it and live it up by spending it,’” said Hanson. “They may say ‘move here and live close to me.’ The son may say ‘I’ll take care of you’ or ‘I’ll farm it.’ Does everything remain the same as when Dad ran the farm? Would Mom start making changes she’s always wanted to but Dad never allowed?”

The wife’s ability to take charge will be enhanced if she was a vital part of the operation, said Hanson. If she was in charge of keeping the farm record accounts and paying the farm expenses, she will probably be comfortable in continuing her management role.

He explained this is especially true if she was involved in the physical work on the farm and with working with the farm lenders in the financial management of the operation. If the wife had a full-time job off the farm and was not very involved in the day-to-day activities, then the entire situation could be totally different.

If there was a farming son or daughter (possibly a farming son-in-law) already on the farm, the mother needs to ask herself if she is willing to turn full control over to them. Would she give them complete freedom to operate the farm?

“A lot now depends on how well this farming son or farming daughter is able to communicate effectively with Mom and keep her informed on what is being done,” said Hanson.

The real issue, he added, is whether the parents have discussed any of this with each other.

“Did they ever share their personal wishes with the other spouse in case of unexpected death?” asks Hanson. “Or was it assumed that everything would remain the same or things would eventually be taken care of in the exact manner that the deceased parent would have always wanted?”

Joyce Peden and her husband, Joe, of Bloomington, Ind., attended Hanson’s seminar and found the information good reminders of decisions they need to make as a farm family.

“We’re thinking about many of the things Dr. Hanson spoke on and we’re working on our wills,” said Peden. “We know our son isn’t going to farm and our daughter probably isn’t going to either, so the valuable things we learned will help us discuss our plans with our children so there won’t be any surprises.

“We know we may not please them with every decision, but things have to be decided. We also know we have to compromise on some things to avoid conflict.

“Hanson’s passion for the subject and his presentation is so important because you’re protecting your farm’s history. You don’t want it sold for development, and you want some control because you’ve worked so hard for it over the years,” she concluded.