CAN THEIR PROB­LEM BE SOLVED?

HOW CAN WE BE FAIR TO TWO FARM­ING HEIRS WHO ARE 15 YEARS APART IN AGE?

Successful Farming - - CONTENTS - By My­ron Friesen

Sub­mit­ted by email from s.c.

We have four chil­dren. Our old­est son loves agri­cul­ture and has many tal­ents. For over 20 years, we have had a good work­ing re­la­tion­ship with him and have helped him get a good start in farm­ing. He now owns some land and ma­chin­ery and a cus­tom ma­nure pump­ing busi­ness. We also have two daugh­ters. One is mar­ried to a farmer 200 miles away; we helped them buy a house. Our sec­ond daugh­ter has many tal­ents and in­ter­ests, but farm­ing is not one of them. We help her with ed­u­ca­tion and travel ex­penses. Our youngest son is 15 years younger than our old­est son, and he, too, has many tal­ents and is also a great as­set to our farm.

The prob­lem is our old­est son has sig­nif­i­cantly more as­sets al­ready and has helped us ex­pand what we have. But when we pass away, we want both of our sons to have equal own­er­ship in the farm. How can we make this work?

THE SO­LU­TION:

This can be a chal­lenge. First, let’s think about what each of your chil­dren may be think­ing. Your old­est may not be ex­cited about be­ing an equal busi­ness part­ner with in­ex­pe­ri­enced lit­tle brother. Your daugh­ter mar­ried to a farmer 200 miles away may won­der why she doesn’t get any farm­land. Your sec­ond daugh- ter may not like farm­ing, but that does not ex­clude her from be­ing part of the dis­tri­bu­tion plan. Your youngest son may won­der if he will spend his ca­reer be­ing pe­nal­ized for be­ing younger and tak­ing or­ders from his older brother. Here are a cou­ple of key points.

1. How much fi­nan­cial help did you give your old­est child in ac­quir­ing as­sets?

Did you help him with re­duced land rents, re­duced ma­chin­ery rates, or other breaks that are all per­fectly ac­cept­able but may have added up to quite a bit?

When you start help­ing your youngest farm­ing child in the same way, it is sur­pris­ing how many times your old­est child for­gets how much you helped him. Are you will­ing to talk to your old­est son and tell him your in­tent to help his brother is sim­i­lar to the way you helped him? Keep in mind the same op­por­tu­nity now will cost more now than it did 15 years ago!

2. Are you com­fort­able with the shorter com­mit­ment your youngest son has made to the farm?

Clearly, your old­est son has been around for 20 years, so he is there to stay. Are you com­fort­able know­ing your youngest child will do the same?

3. Are there any ad­di­tional agri­cul­tural en­ter­prises or busi­nesses your youngest child can start to have own­er­ship in that will add to the farm?

Will your old­est son see the value and op­por­tu­nity to hav­ing an equal busi­ness part­ner?

4. You will need cash to equal­ize things to your daugh­ters at your death.

You can start sav­ing now, but what hap­pens if you die be­fore much is saved up? Most farm­ers keep find­ing farm as­sets to buy dur­ing their life­times. Life in­sur­ance may be the best tool for in­fus­ing cash when it is needed.

5. Do you plan to give in­di­vid­ual parcels to each or keep the land to­gether with each own­ing un­di­vided half in­ter­ests in ev­ery­thing?

Ei­ther way, you may want to in­clude ren­tal op­tions and op­tions to buy if any­one wants to get out or sell.

Your prob­lem can be solved, but it will take some com­mu­ni­ca­tion with your chil­dren about what your in­tent is. Age dif­fer­ences can also cre­ate value dif­fer­ences. Ul­ti­mately, it is hoped that your chil­dren can do what they should do and ap­pre­ci­ate your in­tent.

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