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Farm succession trouble took everything away from Hanson

By Heather Carlile

hcarlile@agrinews.com

ROCHESTER, Minn. — Everything Ronald J. Hanson loved was taken away from him when he was 16 years old. A fight between his parents and grandparents caused his family to be ripped apart when his parents decided to move off the family farm.

That was 46 years ago. For the last three years, Hanson, a professor in agribusiness at the University of Nebraska, has investigated how to pass on the family farm and still have a family.

"Always remember: Farms can be replaced. Families can not," he said.

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The key problem with passing the farm from one generation to the next is that no one ever talks about the family side of it, he said. The dad often wears two hats — a boss hat and a dad hat — and needs to know when each is appropriate. Controlling parents may have a hard time letting go of their farm, it can be difficult to determine what both generations consider a fair selling price and there are many difficult "what if" scenarios a family has to face to be fully prepared, including the unexpected death of a parent or child. These are tough issues to talk about and they are complicated by the fact that farm people are very private, no one ever wants to admit a family has favorites and wills or estates are sometimes big secrets. One set of farm parents he knew kept their will hidden in the freezer.

"Talk about your frozen assets," he joked to a room full of farmers Feb. 28 in Rochester. He spoke during a farm family succession workshop sponsored by Riverland Community College and Wells Fargo Bank.

Hanson said families need to keep communication open and put plans in writing so when life’s unexpected changes happen, the family is prepared and in agreement on what the next steps should be.

"You get it out and you get it discussed," he said.

It’s the parents’ responsibility to make this plan. Without it, everything they’ve worked so hard for could be lost. It’s also the parents’ responsibility to show a united front to their children about the plan and allow the children to express their feelings about it. He’s seen brothers and sisters take each other to court over issues like jealousy because a clear plan wasn’t in place.

"There may be tears, but that’s OK," he said.

When farm families comes into his office, the no. 1 topic of conversation is daughter-in-laws. Many families decide to keep in-laws in the dark about succession plans, but Hanson said this approach will backfire every time. If trust isn’t in a relationship, it will fail.

The farming children need a fair wage for the work they actually do to help the business and parents need to help these children build financial equity for their future. This includes putting farming assets in their name. Otherwise these family members will be in a very unfavorable financial situation if something prevents them from taking over the farm.

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"You’ve got to find a way to help those kids start to build their own net worth," said Hanson.

Children should never feel pressured to return to the farm if their dreams lie elsewhere. At the same time, the younger generation needs to understand that their parents don’t owe them a farm. They should work for it as apprentices and prove their worth.

All of the children — both farming and non-farming — should share in the parents’ estate. However, dividing the assets to all the children equally is not fair if some have made more contributions to the farm than others. Instead of looking for equal ways to dish out the estate, Hanson stressed parents need to decide what’s fair and equitable for their family.

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