Estate Planning: Transferring More Than Just the Estate

Farm Business Management Update, April 2002

By Daniel Osborne

You as a farmer probably think you have done pretty good job when you figured out a plan for passing on the family farm to your children without having to pay estate taxes or break up the farm. Indeed, you have done a pretty good job, but you have more to think about. Your children need to know what to do with the farm once they get it. Thus, you need to consider how to pass on your farming knowledge and expertise to your children in addition to the farm itself.

The average farmer transfers his knowledge and expertise to the children by making the children work on the farm. He says to the children, "Do this . . . and do that," and the children listen; well, sometimes. But what would happen if the parents were not around? Would the children know what, when, and how to do the work and manage the farm? To find out, take a few days off, and see what happens. If your animals are starving and your crops withered away, you need to spend some time transferring your knowledge and expertise.

A few suggestions that might be helpful include:

1. Don't treat your children as slaves or cheap farm labor. A man who has spent his life as a slave in the cotton fields probably would not want to be a cotton farmer when he was set free. Instead, let your children share in the benefit of working on the farm by paying them wages or giving them a portion of the crop.
2. Don't overwhelm your children by giving them full responsibility over everything at one time: the sink or swim method. The sink or swim method will work sometimes, but the chances of success are improved if they learn gradually.
3. Allow your children to gradually assume more responsibility. For example, give them a few cows from your cow/calf operation. Let them make the decisions and reap the consequences from their decisions.
4. Instead of telling your children what to do with things for which you have given them responsibility, let them come to you to ask questions. Your children are more likely to remember what you tell them when they are seeking the answer.
5. Be an advisor to your children for their responsibilities, not the boss.

Of course, some farmers are naturally better than others at passing on their knowledge and expertise to their children. But if you heed these suggestions, you will be taking actions that will increase your children's likelihood of operating a successful farming operation once you are gone. But most of all, take time to think of how you can transfer your knowledge and expertise to your children. Just maybe the costly lessons you had to learn will not have to be learned twice.

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