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Frequently Asked Questions

Retirement and Estate Planning > Who Will Get Grandpa's Farm > Frequently Asked Questions

Frequently Asked Questions

  1. Why was this website developed?
  2. What are some of the obstacles to farm transfer?
  3. What are some things that motivate farmers to start the farm transfer process?
  4. When do farmers start to think about farm transfer?
  5. Why is it difficult to talk to older parents about farm transfer?
  6. What should an advisor such as an attorney do to help families with the farm transfer process?
  7. Which communication strategy (direct control, indirect control or no control) is best?
  8. What are some of the issues when a son or daughter is joining the farm operation full time?
  9. What happens if there is no successor for the farm operation?
  10. Why should farm families hold farm meetings?
  11. Who should be involved in farm meetings?
  12. How should brothers and sisters who live off-farm be included in planning for farm transfer?
  13. How can a son or daughter bring up the issue of a parent's failing health?

 

1. Why was this website developed?
In a study funded by the USDA-CSREES and the National Endowment for Financial Education, Sharon DeVaney, a former retirement planning specialist at Purdue University, asked 40 farm families throughout the US about their future plans. A few advisors such as attorneys, accountants, and Extension educators were also asked for their thoughts on farm transfer. One of the concerns that Sharon DeVaney found was that some families found it difficult to talk about farm transfer.

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2. What are some of the obstacles to farm transfer?
Many farmers, especially those in their late 60s, 70s, and 80s, don't have any retirement plans. They want to work as long as they are healthy. Some older farmers worry that they won't have enough income if they retire.

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3. What are some things that motivate farmers to start the farm transfer process?
There are lots of things that motivate retirement planning. For example: If a family member is working off the farm, he or she could be a participant in a retirement plan at work. Also, farming is not as labor intensive as it was in the past. There is more opportunity to do other things such as work off the farm or take a vacation now and then. Some farmers are motivated to prepare an estate plan after seeing a neighbor cope with a health problem.

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4. When do farmers start to think about farm transfer?
Thinking about farm transfer seemed to start about age 50 or 55. Attorneys said that they get questions from farmers in their 50s and 60s about changing from an active operation to one that is more inactive. Attorneys say that the way to prepare for estate planning is for the farmer to think through what he wants to happen. First, is he or she ready to transfer control or begin to transfer control? Second, is there a successor to take over the farm? Sometimes, the farm operator must discuss the farm transfer with older parents to start the transfer process.

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5. Why is it difficult to talk to older parents about farm transfer?
The younger person doesn't like to bring up the subject of aging. The older parent might be afraid of losing authority if they give up title to the farm or start to discuss farm transfer. Sometimes the issue is deciding who will be the successor. Another issue might be including off-farm brothers and sisters in the farm transfer. Many advisors recommend that a fair division of assets is not the same thing as an equal division of assets.

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6. What should an advisor such as an attorney do to help families with the farm transfer process?
An advisor should try to learn the goals of the older person. It is important to help the older person understand how their estate planning actions will affect those who are left behind such as a spouse and children. The advisor should encourage farm operators to make estate plans while they are in good health and not when they are coping with an illness. The farm operator and the advisor should work together to decide how much time is needed to set up a farm transfer plan. Some attorneys ask their clients to get all of the family together for an explanation when the estate plans are ready.

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7. Which communication strategy (direct control, indirect control or no control) is best?
In a study by Melanie Morgan, Assistant Professor in Communications at Purdue University, the indirect control strategy was preferred. This allows the other person to help solve the issue because it allows for equal input.

The three types of control strategies used in this site are related to a theory of Paternalism and Autonomy. Older adults often have a need to be autonomous; that means they need to retain some authority. A person who is trying to take care of someone may be acting out of feelings of paternalism. When indirect control is used, the person who initiates the conversation is meeting his or her needs to "take care" of the issue while giving the other person an opportunity to share in the decision. In other words, the person who shares can act with some authority or "autonomy."

Retaining some authority or autonomy is likely to be important to an older person. For example: listen to Ed reply to John, his Son, in Scenario 5, Health Issues. Ed says, "All right. But, I will do what I think is right after I see the doctor."

The three types of control strategies are also related to Politeness Theory. This theory is based on the idea that the person who initiated the conversation is respectful of the other person's opinion. At the same time, he or she is able to make the point that he/she wanted to make. In other words, he/she "saved face."

For example: Listen to John and Sally, in Scenario 4 when they discuss the lack of a successor for the farm. Sally asks John, "Can you sleep at night if we sell the farm?" She wants him to feel alright if they decide to sell.

For a second example: John and Richard, the two brothers, are talking about the farm after Mom and Dad decide to let it go. Richard says: "I don't see myself coming back and wanting to work it." John says: "And I don't see myself leaving either."

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8. What are some of the issues when a son or daughter is joining the farm operation full time?
An important issue is how the son or daughter should be compensated for his or her effort. Should he receive an hourly wage like a hired man? Does he have managerial skills in addition to the physical labor expended? What about working on weekends and holidays? These issues should be discussed before the son or daughter joins the farm operation full time. Also, there should be a discussion of how and when the eventual partnership or transfer will take place.

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9. What happens if there is no successor for the farm operation?
If there is no successor, the farm operator might be able to find a beginning farmer. Some states have programs that help match an older farmer and a beginning farmer. The farm operator and the beginning farmer should discuss a possible strategy for farm transfer. There should be a benefit for each person as a result of a transfer plan. If no successor can be found, sometimes there are off-farm children who want to be absentee landlords. It might be possible to hire neighbors to do the farming.

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10. Why should farm families hold farm meetings?
Some farm operators said that there should be regular meetings in which issues can be discussed. It gives everyone involved an opportunity to speak up. Parents should be willing to listen to new ideas that sons and daughters might have.

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11. Who should be involved in farm meetings?
Each family should decide who is involved. Some families feel that son-in-laws and daughter-in-laws should be included. Some think otherwise. Families should discuss what their purpose is for holding meetings and what they hope to accomplish.

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12. How should brothers and sisters who live off-farm be included in planning for farm transfer?
Most advisors suggest that they should be included in the planning for farm transfer, but the contribution made over the years by the son or daughter who stayed on the farm should be rewarded. That could mean that the distribution of farm assets might not be equitable. This should be discussed in advance.

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13. How can a son or daughter bring up the issue of a parent's failing health?
They should introduce the subject carefully and with great respect for their parents' feelings. Parents should be allowed to make the decision about their own well-being unless there is danger involved. For example, if it is not safe for an older person to drive because of impaired eyesight or hearing.

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