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Don’t Split The Farmyard

As a mediator, I’ve seen some pretty dumb agreements about the home yard. When you are deciding to move away, or build a second home on the property, make sure you think things through with your lawyer and have some clear conversations with your successor.

Many farmers in their 80s still have title to the home quarter, even when they’ve got a son in his 50s farming along with them. Why? People born in the Great Depression seem to have a great need for security, based on the things that happened to them in their early years. But that leaves many middle-aged farmers frustrated that the transfer of the title to the home place just isn’t happening. It’s time to ask, “Who owns the home quarter? Who has title?” If it’s not the next generation, it probably should be.

Subdividing the yard to create two titles is not advised. Recently a lawyer shared that some folks are not happy about subdividing the home yard due to issues with sharing water, and other constraints in some rural areas. Try to think through the downsides and upsides of the yard decisions you are making.

HOW DO YOU ENCOURAGE TRANSFER OF THE TITLE?

The first step is to create a safe place for honest conversation. The younger generation is looking for security and certainty also, so how can both generations get that?

Talk about expectations. Remind the older generation that you have already proved your ability to manage, and will ensure that the older folks are financially taken care of. Typically I see the older generation hanging on too long to the home place. A move to a newer more physical friendly home would actually be better, but some folks are very stubborn about change.

Use a good ag lawyer who is an expert about writing sound legal agreements. Some folks want to be sure that they get the title before the parents die, and not leave it to transfer in the will. You can also set up buy/sell agreements for the succeeding generation.

I’ve seen messes where two siblings are left to share a yard site. That’s a great recipe for disaster and endless conflict. Yard sites can be built, but it takes 20 years to grow a decent tree, so start planning some new options — like a second yard site on a quarter close to town — before you actually need the new space.

Invite a coach or mediator to keep the family meeting safe when you are talking about tough issues. One younger couple I know chose never to move to the home yard, preferring to live at the lake, and let the older folks worry about closing the bins and keeping cattle contained. This was a mutual agreement.

Provide a vision and concrete plan for the parents or founders to look forward to. Assure them of your intent to keep the farm viable and profitable. Your conversation about the new residence for the founders, and letting go of the home yard is highly emotional. Be sure to be patient to listen to all the options for resolution, and do some “What if?” scenario planning.

Fear of not being in control is a factor. So is fear of not having enough equity in the estate. Many folks have no retirement wealth bubbles or income streams apart from their land base, and they are afraid of outliving their resources.

When parents try to be fair to all siblings, it can cause more conflict for siblings who don’t want to share the home yard as business partners. One short-sighted parent willed the home farm yard to be shared with a non-farming sibling who got the house, while brother got the bins. This created huge conflict. Think through the personalities involved, and the kind of conflict skills your heirs possess. I truly believe it is smarter to get these home yard transfers done before death, not after.

The biggest reward for transferring land titles while the founder is still living is that everyone knows who will be the next owner, and why.

When the farm is to be kept intact, it is very important that the successor has control of the land base. If the titles are not in joint names of the founding couple, you better find out what the legal ramifications of this arrangement are. A lawyer speaking on estates said “try to get as many assets as possible in the joint names of the couple.”

You likely don’t want to pay the fees and hassle time of subdividing your yard site, but what if your son and daughter-in-law decide to bail from the farm in five years. How can you sell the extra house on the main yard? We’ve seen houses moved to town to fix this disaster.

I’ve seen some horrific scenarios where the successor was forced to share the farm with non-business heirs, which was a compete shock to him. As Jolene Brown says, the phrase “someday this will all be yours” is a lie. “A conversation is not a contract,” she says. So get the home yard site transfers done sooner than later.

Most folks who have made a change in their main residence after decades on the farmyard are glad that they did, and often they say “I wish we would have made the move sooner.”

Don’t split the yard site. Think of the time you need to let go and move further down the road.

Discuss the various scenarios of options for the main yard site with your trusted advisors. Test out living somewhere else for a few months in the winter, and then cut your ties to the main farmyard.

Remember, it’s your farm, your family and your choice. We all have options, but sometimes it is hard to see possibility beyond the shelterbelt.

Elaine spoke about this very subject at Ag Days in Brandon Manitoba. Email her at [email protected]if you would like more insight. Elaine is a farm family business coach who helps farm families focus on workable plans for the future, and execute them! She farms near Boissevain, Manitoba with her husband Wes, and travels the country to speak to farm groups. Visit www.elainefroese.comor www.agvisiontv.com

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Elaine Froese is a certified farm family coach and farm partner. Seek her out at www. elainefroese.com or call 1-866-848-8311. Buy her books for your mom. Share your stories of how these phrases have impacted you. Elaine wants to hear from you on Facebook at “farm family coach” or Twitter @elainefroese.

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