Farm Progress

Next-gen landowners are inheriting land later in life, after being away from the farm for years.

Tyler Harris, Editor

November 30, 2017

4 Min Read
NEXT STEPS: If you've recently inherited a farm, the top question to ask is whether or not the farm should stay in the family. If yes, that stipulation needs to be a part of the farm's estate plan.

We've all read statistics about the average age of farmers in the U.S. But how old is the average landowner? Allan Vyhnalek, Nebraska Extension educator and farm succession and transition lead in the University of Nebraska-Lincoln's Department of Agricultural Economics, notes landowners in Nebraska are also getting older — and in many cases, haven't been on the farm in years.

"We've been getting phone calls from people, saying, 'I'm in my 50s, 60s, 70s, Mom and Dad passed away, and now I have this farm to manage,'" Vyhnalek says. "We're inheriting the land later in life. It's been 40 years since we've been on the farm. A lot has changed in those 40 years."

At recent meetings held across Nebraska titled, "So You've Inherited a Farm, Now What?" Vyhnalek laid out some key points to consider if you've inherited a farm:

• All in the family. An important question to ask is whether or not each sibling wants to keep the farm in the family. If everyone agrees, it needs to be a part of the estate plan.

"At some point in time, you should have the conversation about what to do with this asset," says Vyhnalek. "We're talking about families. The first conversation you need to have is when we get done, are we still going to have a family in place? Don’t make that assumption; get that commitment."

• A seat at the table. Who gets to participate in the discussion surrounding the fate of the family farm is a subject of debate. Vyhnalek notes that in a utopian world, the conversation would involve grandma, grandpa, their children, the children's spouses and all adult grandkids.

"In utopia, that is a good plan," he says. "In practicality, it may not work in your situation."

Some families have individuals with unique personalities that will make family conversation and decision-making challenging.

"Who participates in that discussion is important, because you want to have input from the entire adult family if possible," Vyhnalek says. "The family members will feel valued if they are allowed to have their thoughts heard."

After that, Vyhnalek says the Golden Rule applies — that is, "Ye who have the gold [some subset of the original landowners] make the rules."

• Ask questions, listen to answers. Communication among family members is key — and this means asking questions for clarity and listening to understand the other person's point of view.

"Seek first to understand before you can be understood. Ask clarifying questions," Vyhnalek says.

He notes controversial ideas will come up, but it's important to not attack them. Instead, ask more questions on the advantages and disadvantages of the proposal.

The discussion should take place away from the dinner table — at a local conference room or Extension office, for example. It also goes without saying the conversation shouldn't take place during Thanksgiving, Christmas or any other holiday.

Vyhnalek adds it's a good idea to take notes and record the conversation if possible. That way, it's not necessary to revisit an issue, especially one that's contentious.

• Fair is not always equal. Traditionally, the parents' and grandparents' generations consider dividing the asset equally among siblings the best way. But Vyhnalek says this isn't always fair.

The success plan should compensate for sweat equity contributed by on-farm siblings, and in many cases, that sweat equity has built up over the years.

That said, it's best to include both off-farm and on-farm siblings in the conversation through the years before the land is passed down. This way, it's easier to avoid cutting deals with siblings individually.

Be aware of "sweetheart deals," or family deals made with one sibling that gives them an unfair advantage. For example, charging a lower cash rent than is typical for the area.

However, Vyhnalek advises, "Do not assume that's a sweetheart deal. Ask more questions." That on-farm sibling may have contributed more in sweat equity, and that "sweetheart deal" may be a fair deal.

"Typically, the on-farm sibling helping Mom and Dad perceives their input in the operation as more than it's worth, while the off-farm siblings will say, ‘Mom and Dad really made the farming operation work,’" Vyhnalek says. "Understand there will always be a gap in the perception between the on-farm and off-farm siblings, and the truth will be somewhere in the middle."

 

About the Author(s)

Tyler Harris

Editor, Wallaces Farmer

Tyler Harris is the editor for Wallaces Farmer. He started at Farm Progress as a field editor, covering Missouri, Kansas and Iowa. Before joining Farm Progress, Tyler got his feet wet covering agriculture and rural issues while attending the University of Iowa, taking any chance he could to get outside the city limits and get on to the farm. This included working for Kalona News, south of Iowa City in the town of Kalona, followed by an internship at Wallaces Farmer in Des Moines after graduation.

Coming from a farm family in southwest Iowa, Tyler is largely interested in how issues impact people at the producer level. True to the reason he started reporting, he loves getting out of town and meeting with producers on the farm, which also gives him a firsthand look at how agriculture and urban interact.

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