By SUSAN HAYHURST
Indiana Correspondent

Editor’s note: This is the final installment in a series of articles about farm family succession planning.

SPENCER, Ind. — Putting farm succession plans in writing can alleviate stress and conflict and help preserve farm family relationships, according to Ron Hanson, Neal Harlan Professor of Agribusiness at the University of Nebraska-Lincoln.

“The last thing you want to do is see your children fight over the family farm,” said Hanson, during his recent Indiana Farm Bureau District 7 presentation on how to successfully pass a farm to the next generation.

“Family is the most important thing, not the farm. Parents set the tone for the planning, the discussion and the transference of the farm. Mom and Dad must stand together. They must work on it until they have a strategy ready to share with their children.”

Hanson says it is imperative for the parents and the adult children to understand the control issues being faced when deciding the outcome of the farm.

“It’s often the parents’ dream (or everyone together) for the children to return home from school or career to the farm. Expectation levels on both sides can be high,” noted Hanson.

“Children should never feel obligated to return back home to the family farm after college when career dreams are elsewhere.

“Another side of the issue is that parents might want to help adult children buy their first home, a new car, et cetera, but that’s often done with strings attached by the parents. The control factor can play out in a variety of areas. The family farm is often in place because of the grandparents starting it many years ago. The parents may now be in control, but must be willing to accept change.”

Change is hard for many people to accept, but it’s part of life and we need to know how to handle it, advises Hanson.

“Change is good, it’s progress. Celebrate it; it shows you can move forward. Young producers are taking one heck of a gamble if nothing is in writing, though. If you don’t collaboratively plan for succession, you’ll reap what the lack of planning results in,” he warned.

Hanson is adamant about families understanding the difference between being equitable and equal. “Treat all children fairly and equitably, not equally, in the estate plan. This plan is not about love. Too many decisions are made under time pressure and emotional stress,” he said.

“The key is to plan ahead and start discussing things early in the process. Parents are to initiate the estate planning process and all children should share in the estate, not just those that care more about the farm, are working it or are willing to help take care of aging parents.”

Several questions should be addressed in planning for succession. Has anything ever been put in writing? Have the parents’ will and estate plan been updated and amended to satisfy their wishes? Has a farming operation business agreement been put in place with the farming children?

Has the farming son or farming daughter been given an option for the “first right of purchase” if the farmland and/or the farmstead would ever be sold for any reason?

Hanson advises parents to consider developing prenuptial agreements with the help of their attorney, for their children who are about to marry.

“I’ve come full circle on prenuptial agreements to protect family farm businesses,” said Hanson. “Farm families have sacrificed and worked hard to get where they are today. Generations have built the farm and they are worth so much more today than they used to be.

“The farm is successful if the farm works as a unit with a purpose. That should be reflected in how agreements are drawn up. No one ever gets upset when treated fairly. When everyone is heard and listened to, it is good business.”

Prenuptial agreements are quite important for second marriages, especially if children are involved, according to Hanson.

“His kids get stuff from before Dad’s remarriage, her kids get stuff from before Mom’s remarriage and their kids together should share equally in what happens during the marriage,” he explained. “Consulting with an attorney can be very helpful in establishing discussion and such agreements.”

Larry Gormong and his wife, Rita, of Terre Haute, found Hanson’s seminar eye-opening, especially the comments about prenuptial agreements.

“We’ve been talking as a family about many things Dr. Hanson addressed, but the topic that really instigated discussion following his talk was about prenuptial agreements,” said Gormong. “I’m glad all three of our sons and two of our daughters-in-law heard the presentation.

“Where I thought prenuptials were not needed, I understand now how they can be important for farm families. Hanson’s thoughts gave us fresh perspective and reinforced the urgency of getting everything in order as a family.”

Hanson’s final words to the group were the same he shares with his students: “Your parents owe you nothing. If they help you get started, you are so blessed. They don’t owe you an inheritance, they may share it with you.

“Be grateful for your family. Farms can be replaced, but families cannot.”