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Five Tips for Passing on the Farm

One of the most difficult transitions in any business is successfully moving from one generation to another. Unlike so many businesses, farming has emotional as well as economic ties. Farmland is a different kind of asset than, say, a factory.

"When you transfer a family farm from one generation to the next, there are a lot of emotional issues," says Ron Hanson, who counsels families on this topic when he's not teaching agriculture economics at University of Nebraska. "Those issues have to be discussed and worked through and resolved by all the family members involved."

With that in mind, consider these five ideas if you are in the process or contemplating a business transition to your son or daughter.

Recognize control issues. "Giving up control for the elder generation is tough," says Hanson. "Dad still wants to check on things. Even when the elder couple moves out and the son and daughter-in-law moves in, the mother still thinks she doesn't have to knock on the door to go in."

Grudges can live forever. They need to be addressed in person with all parties present. Children don't want to upset a parent while they are living, so they turn into this silent ticking time bomb until the last parent is gone. "Don't ignore or overlook emotions in the family," advises Hanson. To avoid future grudges remember this bit of wisdom: "No one ever gets upset if they're treated fairly."

You may have to wear two hats. The father who is running the farm wants to see his son or daughter succeed. But he has to know when to wear his 'dad' hat and when to wear his 'boss' hat if the son or daughter is working in the business. Some adult children working on the home farm expect special privileges - coming to work late, passing off real work to other employees, or expecting higher wages. If the boss/dad allows it, that kind of attitude can demoralize the rest of the staff. "Dad may have to change hats several times a day," says Hanson. "Dad needs to correct mistakes in a positive way and give compliments when they are earned, and that's tough for many parents." And if the dad only wears his 'boss' hat all day the kids may feel they are only hired hands with little motivation to work hard.

Keep no secrets from the in-laws. Passing a farm on to a son or daughter can be complicated enough. When the children are married, you add another wrinkle into the family as well as the business. Some elder parents don't want to let the daughter-in-law know too much about the farm business, in case the marriage 'doesn't work out,' says Hanson. "That strategy will backfire every time," he says. "'When you keep people in the dark you create suspicions. Be awfully careful about those big secrets."

Don't pressure the kids to return to the farm. Children should never feel obligated to return to the family farm after college if their career interests lie elsewhere. "You don't want that person back on the farm because they will fail and then end up resenting their parents."