Cecil and Marge Fusco came to visit with me about their situation. Like many couples, they had a child farming with them for a few years but had no idea how the process needs to unfold.
Cecil said "We have a son who farms with us, newly married with no children but he's been working with us for some time. We're just not sure if his wife is truly devoted to the family farm. We'd like to help him out with some things, but we're unsure how to start.”
Marge chipped in, "She's a very nice girl – she just doesn't come from a farm background. She's got a good job but she doesn't help out at home much. They seem very happy – but you never know!"
"This is just my opinion, Cecil and Marge, but I think the stereotypical farm wife may have gone away. If the two of them are happy and both feel like they are contributing to the overall success of building their life together and having a family together, the fact she doesn't come out and milk feed the calves shouldn't be held against her. Who knows – maybe cows scare her, if she didn't grow up around them?"
"Secondly, if she has a good job and brings income home to be shared between the two of them is going to be more beneficial long-term than spending time with the cows. When you start transferring assets – a process you should begin now – your son isn't always going to have income year to year to pay both you and for his family. Thank God she has the extra income.”
"I suppose that's true,” Cecil agreed and Marge nodded along with him. "We're just so used to the way things were. Marge here has been my right-hand woman for years. We thought our boy could use the same. But, we know times can get tough and many women support the men and their families on the farm. So how do we begin transferring things without it causing huge issues on the farm?"
"Start small, Cecil and Marge. If you've got a cattle operation, let your son keep some of the replacement cows to start building farm/ranch income. However, along with this new income give him new financial responsibilities as well. Let him pay for a share of the next piece of equipment. Let him use the income to expand the herd – if you've got room for it. Give him more income, but make sure he uses this new income to reinvest in his future in agriculture."
"If a piece of equipment needs replacing, figure out how many calves he's going to need to pay for a share – or all of it. The more he invests in the farm, the more he's going to put long-time roots down on your family farm. If you've got a grain operation, you can ‘rent' some of your land – or share rented land with your son – but make certain he reinvests, again, back into the farm.”
"Too many people wait until they are ready to retire to start moving assets. This just leads to huge complications as we've got a couple with a mountain of assets going to a child with no credit history.”
"Last but not least, develop an estate plan that shows your son he is an integral part of the plan – whether you live, whether you die, or whether you get sick for a long time. He has to understand that you have a plan for the future and he needs to know what his place is in this plan should any of these things occur."
"He also needs to know what happens in the event he takes over and then changes his mind afterwards to the assets he's received. He's got to stick with the plan for a period of time or the deal is off. This also has to be part of your estate plan.”
You could see the light was coming on in Cecil and Marge's eyes as they nodded along with me. "I can see we need to take a new, fresh look at everything,” Cecil said. "Maybe we haven't given our son – or our daughter-in-law – enough of a track to follow or told them our plans for them. We need a day-to-day, year-to-year plan as well as a plan in case something happens to one or both of us – and we need to share it with them!"
Michael Baron is the owner of Great Plains Diversified Services, Inc. and is a regular contributor to the "Farm And Livestock Directory". Involved in farm estate planning for more than thirty years, Michael Baron is well-versed in farm income taxation, estate taxation, retirement planning, transition planning, oil and gas estate issues, and all other issues facing the family farm, including family dynamics. Presented in a comprehensive, down-to-earth 'question and answer" format, the topics addressed in this column talk about the many aspects of estate planning – and how to 'Keep the Family Farm in the Family'. Contact Michael Baron at [email protected].