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. 

MSU Extension

I just wanted to share a few video links with you!

Extension and MSU

100 Years! MSU Extension

The Next 100 years?

A few years ago, I was able to attend an incredible presentation by Steve Stark, a former Extension communication specialist from North Dakota.  As he shared about history, his lesson came alive in front of the audience.  The skilled lecturer and historian was also an artist. He covered one entire wall of a conference room with paper and while he lectured, he drew scenes and people with chalk. One person described it as having a giant story book created in front of you. His topic that day was the history of the Extension Service in the United States.

Stark giving presentation.  Photo by Kimberly Gressley, University of Arizona Extension. 

I’ve been an Extension Agent since 1996 and an Extension client since the 1970s.   In that time, I’ve heard many people throw around topics like the Morrill Act, the Hatch Act or the Smith-Lever Act.  Generally, these lessons were dry and boring and contained much information I should have cared about, but the delivery, and my learning were both lacking.  In contrast, Stark’s presentation was remarkable and he gave context as to other issues facing the nation and the connections of people with ideas while these Acts of Congress were being decided. 

In 2014, we are celebrating the centennial anniversary of the Smith-Lever Act of 1914 which provided for the creation of Extension.  Thursday, May 8, officially marked 100 years since the signing of the Act.  The creation of Extension outreach education programs could not have been possible without the Morrill Act, which was signed into law in 1862.  Think of those years leading up to 1862.  During a time of tremendous struggle in the United States, key people had a long-term vision for prosperity and furthering access to education to provide equality in opportunities.  The nation was faced with an impending Civil War, yet key players recognized that to propel the nation forward we had to invest in education.  The Morrill Act established land-grant universities that would focus work in agriculture and engineering.  The leadership realized that agriculture and engineering would be fundamental in driving our nation forward.  The United States Department of Agriculture was also begun in 1862 and Lincoln called it the “people’s department.” 

Later, as land-grant universities were teaching agriculture practices, it became apparent that there was a lack of current research in agricultural knowledge across the different climate and growing conditions of the United States.  Again, Congressional leadership tackled the problem in a visionary fashion and in 1887, the Hatch Act provided for the establishment of agriculture experiment and research stations. 

Once land-grant universities were going strong and agriculture experiment stations were providing important research, leadership looked around again for a way to improve lives of citizens.  They realized that not everyone who lived in rural agricultural communities would attend a land-grant institution and thus the leadership decided to bring the information and education to the people. 

In 1914, the Smith-Lever Act provided for the establishment of the Extension Service.  Specifically, the Act stated, “Cooperative agricultural extension work shall consist of the development of practical applications of research knowledge or giving of instruction and practical demonstrations of existing or improved practices or technologies in agriculture, uses of solar energy with respect to agriculture, home economics, and rural energy, and subjects relating thereto to persons not attending or resident in said colleges in the several communities and imparting information on said subjects through demonstrations, publications and otherwise and for the necessary printing and distribution of information in connection with the foregoing; and this work shall be carried on in such manner as may be mutually agreed upon by the Secretary of Agriculture and the State agriculture college or colleges …”

The words of the Smith-Lever Act likely have not mattered to you nearly as much as the result of it.  A country that can feed itself and educate citizens is a nation that can further other accomplishments.  As the visionaries of this country know, we are all connected.  I am proud to be part of the great tradition of Extension.  Montana State University is your university and an educator from the land-grant university is assigned to your county to assist you, whether directly or indirectly, bringing campus to you. 

Our Extension classes in Teton County strive to provide a public value -- from the 4-H youth development program that trains our community and state leadership of tomorrow, to wellness classes that prevent diseases, keeping people healthier, active and vibrantly contributing to their communities longer thereby reducing public health care expenses.  Extension work encompasses agricultural management practices and community development. 

The original Smith-Lever charter statement remains true after 100 years, that the purpose of Extension is "better farming, better living, more happiness, more education, and better citizenship" for the "entire country."

For 100 years, MSU Extension has been educating in local communities. We should celebrate the past 100 years, but more importantly, we should be visionaries in planning for the next 100.  I encourage you to post a comment below to share your vision for your Extension program for the next century.  

Other Resources:

Steve Stark
More on Steve Stark
Morrill Act
Hatch Act
Smith-Lever Act