'Your parents owe you nothing'
By Patrick Meagher
KEMPTVILLE — Ronald Hanson points his finger at the crowd and tells it straight. Even if it’s not what they want to hear.
Forget those feel-good moments, the motivational speaker at this year’s Eastern Ontario Crop Conference sounded more like a scolding father guiding his brood.
Speaking on farm succession he declared: "Your mom and dad owe you nothing," The emphasis was on ‘nothing.’ And then he repeated it in case there were any signs of entitlement in the crowd. "You’re parents don’t owe you a farm. They owe you nothing."
Hanson, an agribusiness professor at the University of Nebraska, says when he tells this to his students they fall silent "because they think they are owed something."
If your parents do hand you the farm then "you are blessed," he said. This time the emphasis was on ‘blessed.’ Because that’s a gift of love and generosity. And you thank them everyday. Most people never have this opportunity to run a farm."
The Hanson dose of down home brutal honesty didn’t stop there. Here are some more Hanson gems.
• Some kids care more than others.
Treat your kids fairly but not the same, Hanson said, because some kids care more about their parents and about the farm than others. As parents, when you decide what to do with the farm, ask yourself which of the kids are more likely to visit, to help out when you are sick. "If we are honest with ourselves, some kids just care more about the money." Take time to plan out the succession. It is difficult to do under pressure of time.
• Parents are living too long.
While that got a laugh from the more than 200 farmers, Hanson noted that unless you’re going for top dollar, selling the farm to the kids has new and emerging problems. The kids likely can’t afford market price and the parents need enough money for a secure retirement. But if parents live well into their 80s or more, their kids might be in their 70s and still not own the farm. That said, you have to plan ahead for medical issues of older parents.
• Get that plan on paper because "parents later in life can do stupid stuff."
People change, situations change and circumstances change, he said. Stupidity happens, he said, rhyming off the few scenarios he hears. " Everything was fine until dad had his stroke. Or everything was fine until mom moved into the home."
Parents and their children have to sit around the table and talk about what is going to happen when two of those chairs are empty. "That day will happen," he said. "Do you have a plan for it?"
• Relationships are most important.
"Farms can be replaced but farm families can’t." Families are destroyed when there are secrets, he said. "Secrets destroy trust. Lack of trust destroys respect."
Farms are also hampered by parents who raise their kids to be followers, to do as they are told. The kids grow up without direction or goals. Dad has to wear his "boss hat" on the job and also his "dad hat" many times a day. Dads have to correct mistakes in a positive way that builds confidence and self-esteem even in adult children.
• "I don’t believe in sweat equity."
Say what? If the succession plan is not on paper, sweat equity isn’t worth a dime, he said. "Sweat equity very rarely gets rewarded." But a written plan does because it has force of law, even when siblings don’t like it. For example, the son comes home and is told if you stay and work on the farm you get the farm. After 20 years, the father gets sick and has to sell off the farm to pay for medical costs. So, the son still has nothing. If you can’t get an agreement on paper, get out.
"If someone is not willing to put it in writing, that should tell you something."
He told one story of a son who worked the farm on a promise of ownership. But when the son turned 40, the only thing he owned was his pick-up truck
• Write a farming operation business agreement.
If the parents die unexpectedly or if dad dies and mom takes over things will be different, whether you like it or not. If mom remarries, things could really change. An agreement can offer the farming son or daughter "the first right of purchase" if anything is to be sold. The agreement can include who in the family gets to take over and at what price.
The shocking news is that if nothing is written into a legal document with a lawyer then succession planning from one generation to the next stands little chance of success, especially if one parent dies early.