Will Your Farm or Ranch
Stay in the Family?
The author, an agricultural
economist, has based this article
on a study of 200 farm families
and the experiences of 222 law
yers in handling farm estates.
"I HAVEN'T THOUGHT about it.
. . . But maybe I should!" That was
the common reply when almost 200
farm families were asked about the
disposition of their farms.
Entirely too many farm owners—
most of them in fact—die before they
get around to making a decision as
to who gets the farm! The families,
the farms and the public will bene
fit if farm transfer arrangements are
made more carefully and sooner.
For Future Generations
Many farmers want to keep their
farms in their own families for fu
ture generations. There are sound
reasons to support this desire for
those on adequate and efficient farm
units. One of these reasons is that
a farm transferred within the family
can more easily be transferred as a
"going concern.
One has only to look around the
average farming neighborhood to
realize that relatively few farms stay
in the same family for successive
generations and that even fewer
farms are transferred as complete,
operating businesses. Often the re
tiring farmer sells his stock and
equipment at public auction, takes
his valuable management knowledge
off the farm and lets a new operator
learn by trial and error.
There are numerous reasons why
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farms do not stay "in the family."
These include the lack of heirs, or
the unwillingness of heirs to farm,
inadequate size of farm business,
lack of capital and reluctance to dis
cuss the disposition of property or
to take any action until after . the
death of the owner.
What to Do About It
There are, however, many families
with a suitable business which they
wish to transfer to the next genera
tion. What can they do about it?
No two farm-family situations are
exactly alike. Therefore no one def
inite plan can be laid down for use
by all farm owners. The study of
many farm-family situations and the
experience of many attorneys, as
Homesteaders Settle Down
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—Montana Farmer-Stockman Photos
The tent pictured above was the home of Mr. and Mrs. Alex Brug as they
started in the summer of 1947 the difficult job of making a farm and borne of
their homestead on the Shoshone reclamation project in Park county, Wyoming.
Now they live in the comfortable home shown at the right. Brug built it him
self from one of the barracks from the Heart Mountain internment camp that
were given to each homesteader. Brug now has a herd of 14 Milking Shorthorn
cows and a few hogs. The farm Is entirely fenced in and is producing grain, hay
and pasture for his small dairy operation.
By MAX MYERS
brought together in this report, seem
to indicate that the following points
are important;
1. It is rather generally believed
that there are benefits to individuals,
families, communities and the public
if successful farm businesses are han
ded down as going concerns through
the right kind of farm families.
2. Some farms probably should not
be kept in the family. Unless the
business is adequate in size and ef
ficiency to support a family, and
sometimes two families, there is lit
tle reason to make the effort neces
sary to keep one of the children on
it. To do so is to try to swim up
stream against the current of a desir
able trend toward fewer, larger farm
businesses.
est cannot be created overnight just
when the parents wish to retire. It is
something that starts in childhood,
possibly with small shares in farm
in g such as 4-H and FF A projects,
It is frequently developed further
with share-operating agreements as
the youngster reaches maturity.
The continuation of such interest
Who Will Take Over?
3. If a given farm business is ade
quate and if it is desired to keep it in
the family, then the next question is
that of deciding who is willing and
able to take over from the present
owner.
For families with children this
may raise the problem of creating in
at Içast one of them an interest in
farming and in the continuation of
the home farm business. This inter
is frequently tied to an understand
ing by the young man or woman of
how the home farm is to be passed
on and to whom. Farm couples who
have no children of their own to take
over the business sometimes work'
out similar arrangements with other
young people.
Discuss Future Plans
4. The family should be able to
discuss future plans for the farm
business and the eventual disposition
of the property, to discuss this
sibly and with a realization that dif
ferent members have different in
terests. This should be done early,
Some decisions should be made be
fore all the children choose other
paths and leave home.
It seems preferable that these de
cisions and the necessary legal ar
rangements be made before the par
ents expect to leave this world or
sarily mean that title to property
has to be transferred early, but some
definite plans should be made. Such
planning and action can forestall fric
tion and uncertainty within the fam
ily. It can take into account the ef
fects of taxation and make it pos
sible to avoid losses to the family or
the farm and unnecessary expenses
to the future estate.
even to retire. This does not neces
5.. There are various alternative
methods or legal devices which can
be employed to put the family's plans
into effect. These devices differ and
are suited to different situations.
property in a will and specify who
gets what and on what terms,
3. Joint tenancy—He may hold the
property in joint tenancy with right
of survivorship so that when he dies
the property will pass to the other
person or persons named in the title.
4. Gifts of property—He may give
his farm away before he dies or he
may give future title but retain life
use of it.
lie before the farm owner who is con
sidering the disposition of his prop
erty are these:
1. The law of inheritance (or des
cent)—The owner may make no dis
position or plans. After he dies in
testate (without a will), the courts
will make disposition of the property
to the heirs.
Principle Alternatives
The principal alternatives which
2. A will—He may bequeath the
various restrictions.
6. Incorporation—He may incor
porate the farm business and then
dispose of shared in the corporation
by methods listed above.
5. Sales of property—He may sell
the farm, either outright or with
Interesls to Reconcile
Several sets of interests must be
Drain Ditch Saves Crop Land
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—Montana Farmer-Stockman Photo
Drain ditches like this on the H. H. Bellefluer farm, Flathead county, can be
well worth while when they make possible excellent grain fields seen in back
ground. This land was used only for grazing horses, and equipment couldn't
be used on H before it was drained. With soil conservation district help, some
5 miles of drain ditches were dug on the farm. Some, like the one in the fore
ground of this picture were dug deep with a dragline while others were put in
with a regular ditcher pulled by a track-type tractor. About a section of land
was drained and Bellefluer says the next year's crop paid for the work.
reconciled in order to accomplish a
successful family transfer of a farm
business. These interests include the
following;
1. The needs of the parents (land
holders) for security of income as
long as either lives. This is particu
larly important, when the farm is
their only property.
2. The desire of the young man
and his family for security of expec
tation, that-is, the certainty that they
will own the farm if they work on it
and improve it.
3. The interests of other heirs in
the family, who under the American
way of doing things, expect to re
ceive equal or equitable treatment.
The interests of the farm should
not be deteriorated in the process of
farming or of transferring the farm.
The community and the general pub
lic also have an indirect interest in
the farm—an interest in efficient,
continuous production of foods.
The importance of each of these
interests will vary from family to
family and from time to time. The
problem, then, is to select arrange
ments which will fit the particular
combination of circumstances in the
individual case.
Choice of Method
It is difficult to rank one method
as better than others, but certain
generalizations can be made. For
the farm owner who must depend
on the income from the farm as long
as he lives, the disposition by means
of a will is probably most suitable.
In situations where it is more im
portant to give the next generation
certainty that they will get the farm,
it is probably most satisfactory to
sell the farm to them when the owner
is ready to retire. In both these sit
uations, however, a case can be made
for the use of a deed with a retained
life interest to the parents. The land
owner should decide what he wants
to. do.
A matter as important as the ar
rangements for transfer of farm
property should never be undertaken
without competent legal advice and
assistance. A lawyer can advise the
farm owner as to the effect of vari
ous plans and methods on the farm
er's particular situation. Once the
owner has decided what he wants to
do the attorney can tell him how to
do it legally.