NPR – What’s It Worth If You Stay On The Farm (p236-243)
The aging farm population, the need for replacement farmers for those who are or will retire, beginning farmer schemes and farm family business succession planning have been and continue to be issues that are receiving a great deal of attention over the last several years. An example is the current United States Farm Bill that contains approximately eighteen million US dollars to fund grants awarded through the Beginning Farmer/Rancher Development Program. Other examples of the interest in new farmers and farm family business succession include the FARMTRANSFER international research project. FARMTRANSFERS is a collaboration between Iowa State University, Ames, Iowa USA, Exeter University, Exeter, Devon, UK and the University of Plymouth, Plymouth, Devon, UK. A postal survey is employed to determine whether or not a successor has been of identified; demographic information on the owner/operator and the successor; the transfer of decision making authority to the successor and the timing thereof; and, the estate plan of the owner. Another example of interest in beginning farmers, farm entry opportunities and farm succession is the International Farm Transition Network (IFTN) that was established in 1990 and has grown to twenty member organizations throughout the United States and Canada. The IFTN members provide a variety of services including educational seminars on farm business succession planning.
Historically farm succession seminars have focused on issues such as business entities, financing the purchase of the farm and estate planning. Recently the emphasis has begun to shift to the intersection of the individuals’ priorities and goals with the selection of the business entities and estate plans.
One area of particular difficulty for parent/owners is the division of assets by the estate plan. In a 2006 FARMTRANSFERS survey of Iowa farmers who had an estate plan responded the best plan was to divide the land equally among all heirs regardless of participation in the farm business. This distribution often results in the demise of the farm business as the successor cannot afford to buy out the other heirs. How then should the contribution of the one farm be valued and how should it be credited?
Keywords: Succession, Inheritance, Contribution, Wealth, Heir, Successor
Author(s): Baker, J.R.
Organizations(s): Iowa State University