For many farm and ranch families, bringing children or grandchildren into the operation is the ultimate goal. Successfully bringing additional family members into the operation may require some creativity as all parties need to maintain a viable standard of living. This is the first in a series of articles that will highlight ideas and tactics for bringing another family member into the operation.
One tactic is to provide new family members with monetary compensation, such as an hourly wage or salary. The total compensation should be comparable to the market value of wages to hire a non-family member to do the same work.
Here are things to consider when employing this strategy.
- Start anytime — This strategy can begin early in life. Children under 18 can earn monetary compensation from the farm or ranch. This can give family members a sense of responsibility and allow them to learn how to manage money at an early age. Furthermore, this can jump-start their savings for education, retirement or business assets. Work with a financial advisor to explore tax-advantaged ways to save and invest on a child’s behalf such as Roth IRAs or 529 Accounts.
Continue this article on the Center for Agricultural Profitability.
