Equal isn’t always fair in farm transfer

We never know the love of a parent until we become parents ourselves.

If your child needs you in the middle of the night, you are there.

If they need advice or a shoulder to cry on, you are there.

Even when they have annoyed you or made you angry, you love them in a way they will never understand.

That goes to explain why one of the most difficult dilemmas many retiring farm families face is how to transfer the farm to a young son or daughter who is at home farming the land, while still being fair to the non-farming children.

What is fair?

In the dictionary, the word ‘fair’ means treating people equally without favouritism or discrimination.

When it comes to succession planning and transferring the family farm, in my opinion, fair is not necessarily every child getting the same thing, but every child getting what they need in order to be independent.

Fairness does not always mean equal treatment of all children.

Sometimes treating all children equally when it comes to succession planning means you could end up being very unfair to the child at home who is farming.

Dividing a farm is rarely an option, unless the holding is very large.

Many farm families have different reasons for unequal treatment of children. Some of these reasons include:

1. Non-farming children receive college tuition, a down payment on a house, a site, or other compensation, so they receive their inheritance early. You help set them up in life and give them a good start.

2. The farming child helped to create part of the final estate of their parents by actively contributing to the parent’s business over the years, so they may be entitled to more.

There is an issue of “contribution versus compensation”.

Fair does not always mean equal. Equal does not always mean fair. Non-farming children often leave the farm in their late teens for careers elsewhere.

They may have no interest in farming, or even in receiving a share in the farm.

3. Parents want the farm to “stay in the family”.

Consequently, they are willing to give more to the farming child whose goal it is to stay on the farm and keep it in his or her family.

There is a hope held that that child may eventually pass it on to a grandchild, someday.

4. The farming child is getting delayed compensation for work performed in years when he or she was underpaid.

The farming child may have given up long-term foreign travel and other luxuries to stay at home farming.

The child may have invested a great deal of “sweat equity” into the business already.

5. A farming child has been, or will be, attending to the majority of the physical and business needs of the parents in their declining years.

It may be beneficial to involve all children in the transfer process, and certainly to communicate to all children the final plan for distribution and transfer of assets.

This communication should be done prior to your death or the lifetime transfer, so the farming child is not left in the embarrassing or awkward position of trying to explain your actions.

Doing this can avoid a catastrophic family controversy, and will ensure a smooth transition and help keep relations intact between siblings.

Very often, you will find that when people are consulted and understand the reasons behind your decisions, they respect them.

Parents who develop a business transition and personal estate plan do not have to stop farming the day they sign the plan.

Developing a plan preserves what they have worked so hard to build.

The plan ensures assets pass to whom the parents wanted them to go to.

For some farm families, deciding what to do with the farm business can be very troublesome.

How can we pass the farm business to the next generation, while at the same time not create any animosity or envy between the children?

If we divide it equally between all the children, will it create such small pieces that the successor child cannot make a living operating the family farm?

If one child is required to buy out his or her siblings, will the business create enough income to make this a feasible option?

Most parents would say, “we want to treat our children fairly”. Is dividing the farm equally between all of the children always a fair solution?

Every situation and family is unique. It is up to you to decide.


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