If you’re like most farmers, it’s incredibly important to you that the family farm that you’ve worked so hard to maintain continue to be passed down in your family. As a parent, it’s probably even more important to you that your kids not fight and feud with each other after you are no longer here.
If you only have one farm and multiple children, and you don’t plan for how to provide for those children when you pass away, conflicts could arise. Some of your kids might want to farm your land and might fight over who gets it. Others might want to sell it and divide the proceeds.
It’s often the case that one child has a lot more “sweat equity” in your family farm than the others, and it could be tempting to leave the farm to that child in your will outright. Here are some things to consider before taking that step, so that you can prevent your other children from feeling left out.
Make sure you have a will, and make sure it’s thorough
Disputes arise when children don’t feel like they are being provided for in a fair manner. That’s why having a solid succession plan for your farm or ranch is so important.
Absent unusual circumstances, most parents generally try to make sure that each child has roughly an equal share of the estate so that they don’t feel like they have to fight their siblings to get their dues.
It helps to talk to your kids, so they know what to expect, and so you know what each kid will want. There’s no use leaving something to a child who won’t appreciate it as much as one of their siblings would, or who would prefer cash instead. After you’ve taken every child’s interests into account, you can outline your farm’s succession plan. It’s a good idea to make sure that your kids all know where your will is located so that they don’t have to hunt for it once you’re gone.
But I only have one farm. What can I do?
For many farmers, the farm is far and away the most valuable asset they own. If they were to give one child the farm, the others would be left with shares of the estate that are of much lesser value. On the other hand, if all of the children are given equal ownership interest in the farm, that can create other problems, because the child who wants to farm the land would probably be forced to buy out their siblings’ interest. This can also be a source of hard feelings and contention.
Some farmers respond to this challenge by getting creative with their will. For example, you could make an arrangement by which the child who wants to farm the land would be renting it from their siblings, and compensating them accordingly.
This arrangement is a win-win. The non-farming siblings still get value from the farm, and the farming sibling doesn’t need to come up with all of the money necessary to buy out their siblings all at once. The farming sibling’s rent payments could even go towards buying out their siblings so that they eventually become the sole owner.
It will be hard enough for your children when you pass away. It would be much harder if they were also fighting with each other instead of coming together to support one another in their grief. You can help to prevent that pain by communicating clearly with your children now, creating a solid succession plan for your farm or ranch and making sure that your will provides for each child fairly.