Farm and Ranch Life by Dr. Michael Rosmann 

 

 “It’s easier to talk with your parents about sex than about the transfer of the family farm,” said the presenter in a session about farm transitions at the January 2015 Practical Farmers of Iowa conference.

Initiating the first discussion among the landholders and their heirs is often the most difficult part of addressing farmland transfer when undertaking estate planning and farming transitions. Farmers and ranchers who run – or ran – their own family operations usually have the best years of their lives, most of their assets and their sense of self-worth tied up in what they endeavor to pass to their successors.

Potential heirs have varying degrees of understanding of what their predecessors went through to make their operation successful, and the heirs may have differing ideas about how to use the land and other farming resources. Therein lies the rub.

Each generation wants appreciation and influence in the discussion of the farmland transfer, and for different reasons: the older generation for what they did, and the younger generation for what they hope to do. How can they begin discussion about transferring the farm?

Developing a farm legacy letter is a job for the landowners. It helps them clarify their goals and methods of passing the land to their successors. A legacy letter usually includes a short history about the farm and the farming practices that worked for the current owners.

Developing a legacy letter encourages the current owners to identify the values and aims they would like to see continued on their land by future generations.

When shared with the heirs, the legacy letter facilitates thinking about and resolving the farm transfer for both those who farm and those who won’t farm but will inherit a portion of the estate. It often inspires the farming heirs to consider how they will carry out their own business plan and it sets a precedent for how they may eventually disperse their land.

The Practical Farmers of Iowa (www.practicalfarmers.org) offered advice about developing a farm legacy letter in a Dec. 24, 2014, news release that is available online and in a newsletter.

Bringing the owners and their chosen successors together to construct a transfer plan is usually the second step. The development and agreement on a transfer plan is a process that may take 1-5 years or more.

When developing their transfer plan, the owners have to decide if they wish to include only the givers and receivers without their spouses in the first meeting, whether or not to add them to later meetings or to start with all the owners and the successors-by-marriage.

Sometimes the owners choose to include a long-term employee, renter or an entity such as a trust as a successor; the owners must decide if they want to include them or their representatives in the meetings.

It is important for the owners to set the tone for subsequent discussions during the first meeting. Openness by the owners and fairness in the discourse are imperative, and all the more important if the heirs don’t share equally in the eventual estate distribution.

It is recommended to not hold farm transfer discussions during other family get-togethers such as Christmas and birthday celebrations. The meetings should focus only on the transfer and not on other matters.

Each generation has something to say. The landholders may want successors to be motivated by a philosophy similar to theirs because its principles guided their survival and advancement. The successors often feel they have an opportunity through inheritance to implement their own dreams for success. Their approach may differ from their predecessors’ methods.

Iowa’s poet laureate, Mary Swander, has written a play, “Map of My Kingdom,” that is designed to open up conversations about many of the defining issues for both generations of farmers. Individuals and groups interested in attending a performance or scheduling the event locally may check the website at www.maryswander.com

Many farmer organizations such as state affiliates of the American Farm Bureau Federation, local and state farm business associations, sustainable farming asso-ciations and beginning farmer programs offer workshops and other resources such as literature and counsel for farmers considering transfer of their land, and for the potential heirs as well.

Agricultural colleges and land-grant university extension services usually are aware of workshops and planning services available in the area.

Planning for farmland transfer is timely since the average farmer currently is 59 years old and the average age of retirement is 75 years, thereby causing half the U.S. land farmed today to likely change operators over the next 16 years.

Every farm transfer situation is different. A good deal of thought and honest communication among the operators and their successors can facilitate a smoother transfer process. Additional guidance is available in several previous “Farm and Ranch Life” columns.

Michael R. Rosmann, Ph.D. is on the adjunct faculty of the University of Iowa, author of Excellent Joy: Fishing, Farming, Hunting and Psychology, lectures across the United States and abroad and owns a row crop farm in Harlan, Iowa.

He is a founding partner of the nonprofit network AgriWellness, Inc. Email thoughts and questions to him, and find recently published columns available for a small fee, through his website at www.agbehavioralhealth.com