Transferring Your Farm or Ranch to the Next Generation

I follow a blog written by Katie Bangs, and while I’ve never met her, I feel like I know her.  I know her husband, as I used to be his babysitter.  Katie and her husband, Jeff, are back helping run the family farm in the north Joplin country where I was raised. I very much enjoy her blog, Prairie Ponderings:  The Fullness of an Open Land, as the blog is rich with agriculture and pictures of a landscape I love. 

Her recent post on her designated “Thankful Thursday” was about gratitude in the workplace.  Here is an excerpt:

“On a farm, our coworkers are often our family. Sometimes being around family 100% of the time is more difficult than being around coworkers who aren't related to us. Why? It is so easy to take for granted that our family members know that we love and appreciate them for who they are, let alone the hard work they may be putting in on the farm. We forget to actually verbalize our appreciation and thanks for family members’ contributions because they already know we love them, right? … Recently, Jeff and I were invited by his parents to attend their annual meeting with their accountant and their lawyer. We were asked to attend because we are continuing the ongoing discussion of transition. What will the future look like as the parents transition away from farming full time and Jeff and I take over? There are a lot of financial and legal considerations to ensuring the transition process runs smoothly.

We all spent quite a bit of time discussing options and weighing pros and cons, both legal and financial. I'll readily admit that some of the jargon was over my head, but what really struck me was the overall atmosphere of the meeting was one of mutual respect and gratitude for one another. I felt lucky to be in a family where it is possible to sit down at a table as four people involved in a family land transition, with everyone feeling like their voice could be heard. No arguments occurred, and everything really went very smoothly. This is not always the case in family farm transition talks. Even the lawyer and accountant admitted by the time our meeting was over that the whole thing went very smoothly and they had both been in meetings like this that had gone much, much worse.”

Katie’s post had me thinking about all the complexities of transferring a farm or ranch to the next generation.  She is definitely right that not all families handle matters calmly and thoughtfully.  For some, different family dynamics and structures add to the complexity of transferring an ag operation, especially when more than one adult child wants to be part of the family business.  Dividing a farm or ranch in a way that seems equitable is certainly not as easy as dividing savings accounts or life insurance proceeds.

There are also the complications of control and decision-making.  It can be a unique challenge to have your mom and dad be the bosses in your workplace, especially if you’ve worked the place every day for the last several decades.  In addition to the relational considerations of the day-to-day operations of a family farm, there are the legal and tax consequences related to a potential transfer.  Add to the mix generational differences, throw in some family baggage and you have potential for a family implosion.  Unfortunately, many people expect so much unpleasantness that they avoid the subject all together, which seems like poor business planning.  Most businesses are constantly looking to their future and planning for the sustained success of a business.

Whether you anticipate a smooth or bumpy transition on your farm or ranch, it is definitely worthwhile to spend a bit of time learning, planning and communicating about an eventual transfer.  To help you get started, we are pleased to have Dr. Marsha Goetting, MSU Family Economics Specialist, in Teton County on Monday, March 9 presenting classes and taking appointments at the Stage Stop Inn.  She’ll present, “Transferring YourFarm or Ranch to the Next Generation” from noon-1:30 p.m. An evening program, “Think You Know Who Receives Your Property When You Pass Away?  Think Again …” will be presented from 6:30-8:30 p.m.  Register for the free classes by contacting MSU Extension in Teton County at 466-2491.  Each session will be different and filled with information useful to families regardless of their ages or financial circumstances.

In addition to the two classes, Goetting will be taking appointments with families or individuals to discuss financial and estate planning.  Goetting has a wide breadth of knowledge in many areas of financial planning, from basic budgeting to charitable distribution of multi-million dollar estates.  Each appointment will be 30 minutes in length, filled on a first-registered basis.  Goetting’s primary goal with these sessions is to learn about people’s situations and educate them about options and resources.  No legal advice will be given.  The sessions are also provided free of charge.  Six one half hour sessions are available on Monday, March 9, staring at 2 p.m.   An additional five sessions are available Tuesday, March 10 starting at 8 a.m.

For all the dedication most farmers and ranchers have to growing and maintaining their operations, it just makes sense to invest some time in planning for the future – not only of the farm, but of the families who live there.  It also couldn’t hurt to follow Katie’s advice and let the people you work with know that you appreciate them – from the person on night shift calving, to the person who makes sure there is grub for the crew to the one fueling the tractor for seeding.  Sowing little expressions of gratitude can reap a bountiful harvest.