Avoid Family Trouble when Planning Farm/Ranch Succession

Avoid Family Trouble when Planning Farm/Ranch Succession January 24, 2019

There are a lot of potential hot spots that come up when working with farm or ranch families on succession or transfer. One is the perception of the on-farm siblings vs. the off-farm siblings. Another pertains to the use of the family meeting to start the conversation about what happens to the assets when the farm or ranch is to be transferred.

Farm Succession – How Perception Influences Decisions

The story goes like this: The family has one brother who stayed on the farm to work with Mom and Dad. Mom and Dad are now gone. The other brothers and sisters are now wanting to meet to determine an equitable way to split the assets. The on-farm brother has been there over 50 years. He has contributed sweat, management, and value to the operation for decades.

Then the reality sets in. There is a family conversation about the farm now that the parents are gone. It is fairly common to have a difference in perception about the on-farm brother’s contribution to the operation over those years.

The on-farm brother will see his contribution as 9 or 10 on a 1 to 10 contribution scale. He obviously thinks that the farm grew and prospered because he was there helping Mom and Dad for literally decades. He brought new information and technology to the operation through his college education. He made huge advances to the genetics of the cow herd and the productivity of the crops. Not only did he provide valuable sweat equity, but his continuous studying and introduction of new technology was invaluable to the growth and profitability of the operation.

The off-farm siblings do recognize that the on-farm brother did put in the sweat equity with Mom and Dad. But typically they feel that the on-farm brother rode on Mom and Dad’s coattails for years/decades and that the success of the operation was always due to the brains and management of the parents. The on-farm brother gets recognition for some sweat equity, but the off-farm siblings still feel that he primarily rode the coattails of his parents. They value the on-farm brother’s contribution as 5 or 6 out of 10 on that 10 point scale.

Continue Reading this January 16 Cornhusker Economics