FARM INHERITANCE PRACTICES
The transfer of family resources from one Great Plains generation to the next is often difficult and stressful. The farm is perhaps the most difficult of all family resources to pass down because it represents both an economic enterprise and a way of life. The inheritance practices, therefore, go beyond law and cross over into folkways, where the decisions are made in the family, albeit within the wider context of formal legalities.
Typically, two generations are involved in the transfer. The "senior generation"–the family members transferring the farm—may still be principal owners and managers, or they may have already begun to transfer control to someone else. The "junior generation" are the children of the senior generation and the spouses of the children.
When planning the transfer of the family farm, family members often identify specific goals they want to accomplish. For some family members–often those whose farm has been in the family for many generations– ensuring that the family farm remains intact and in the family is an important goal. The maintenance of the family farm as a viable financial entity is often a second goal: the family wants the transfer accomplished in a way that ensures that the junior generation is not burdened by financial costs which prevent the successful operation of the family farm. A third goal is to use the revenues from the family farm to provide an income adequate to support the retirement of the senior generation.
To attain these goals, family members use various principles. First, families sometimes insist on the principle of equality of treatment of the junior generation. Here, families want to ensure that each member of the junior generation receives an equal share of the family farm resources. Goals incompatible with this principle may be sacrificed to ensure equality and fair treatment for each child. If necessary, the farm will be sold and the resulting financial assets evenly divided so that all offspring are treated equitably. Second, some farm families embrace the principle that the "right" to inherit a share of the family farm must be earned. This principle implies that only those who have shown a commitment to the family farm through hard work on the farm have any claim. Providing choice for the junior generation is a third principle that sometimes guides the transfer. Families adopting this principle want to ensure that members of the junior generation have the opportunity to choose their own futures, whether running the family farm or embarking on a nonagricultural career. Fourth, an exchange relationship might be established between the senior and junior generation. One child–typically the eldest son–receives the farming operation but must agree to take care of the parents as long as they live. Siblings of that child might receive a symbolic, but very small, portion of the farm. Finally, families vary in who is permitted to participate in the inheritance decision-making process. Some families insist that only members of the senior generation should be involved. Other families want all immediate family members–the senior generation and the junior generation–to be actively involved. Spouses of the children are explicitly excluded. Some families embrace an inclusive principle. They want all family members–the senior generation, the children of the senior generation, and the spouses of those children –to be involved in the process.
Combining goals can often be unattainable. For example, the use of the farm as a retirement package can preclude the transfer of a financially viable farm to the junior generation. To obtain the financial resources to fund the senior generation's retirement, the junior generation may be required to rent or even buy the farm, thus incurring costs that reduce its financial viability. However, some combinations are compatible. The preservation of the family farm and the maintenance of the family farm as a financially viable economic enterprise are not mutually exclusive. In fact, they are mutually reinforcing.
Prioritizing some goals prevents the adoption of certain principles. For example, passing on a financially viable farm while maintaining the principle of equitable treatment among the members of the junior generation is not always possible. Securing a financially viable operation sometimes requires some members of the junior generation to receive less than other members of the family. However, the selection of certain transfer principles can facilitate the accomplishment of specific goals. The principle specifying that one child will inherit the farm and be required to support the parents is consistent with all three goals: the farm is preserved when the entire farming operation is transferred intact; the farming operation is not financially burdened by the necessity of having to rent, or even buy, the operation from the senior generation; and the farming operation can be considered a retirement package since some farm income must be used to support the parents in their retirement.
Ron G. Stover Mary Kay Helling South Dakota State University
Stover, Ron G., and Mary Kay Helling. "Goals and Principles of the Intergenerational Transfer of the Family Farm." Free Inquiry in Creative Sociology 25 (1998): 201–12.
Stover, Ron G., and Mary Kay Helling. "Transferring the Family Farm." Extension Extra 14040 (1996): 1–3.