More than 20 years ago, a Maryland farmer died. In his will, he passed on his farm to his wife.
His son would work hard on the farm, but when he died years later, his family members realized he had no legal right to the land. So he left his wife and his mother engaged in a bitter dispute over the value of the farm’s assets and how to split them up.
This is the type of dispute that the University of Maryland Extension, part of the agriculture college, is hoping to prevent through a series of workshops detailing how to successfully pass on a farm to the next generation.
UME is partnering up with the Department of Agricultural and Resource Economics, the Agriculture Law Education Initiative, the Maryland Department of Agriculture and Nationwide Insurance.
“The idea is to help provide them with resources to slowly get the transfer process started because if it’s not done effectively it can lead to a lot of problems down the road,” said Paul Goeringer, a UME legal specialist.
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The first series, “Transferring the Farm to the Next Generation,” will discuss business management plans, tax basics and other technical aspects of transferring a farm.
“You’re not just transferring a farm, you’re transferring a business,” said Lori Lynch, the department chair.
One of the most common fall pitfalls farmers fall into is simply never creating a plan for what will happen to the farm after they die or retire.
“There’s a lack of communication about what the parents wanted their children, or nieces or nephews or whoever to do because it was never written down,” said Mayhah Suri, an Agriculture Law Education Initiative research associate. “People don’t like talking about what happens to them after they’re dead.”
Another common pitfall is trying to be equal and not offend family members when dividing the farm up between heirs, said Lynch, even if certain family members are more invested in the farm than others.
The workshops also encourage and help farmers to find the right lawyers and accountants to assist them.
“In a way, it’s to help them prepare to have a discussion with their lawyer or their accountant about these sorts of issues,” Lynch said.
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This series was partially inspired by the loss of Maryland farmland, which has gone down by over 15 percent in the last thirty years, according to the Census of Agriculture.
“One thing that also drives this decline is kind of a mismanagement of the family business and a lack of knowing how to transfer those assets and how to install the son, the daughter or the nephew as the owner of the business,” Suri said.
The second series, “Investing in your Farm’s Future,” will discuss retirement planning, communication strategies, estate planning case studies and other steps farmers can take now to ease the succession process in the future. It will include presentations and exercises to create a plan for farmers to pass on their farm.
The workshops are $10 each and run at multiple dates and locations in Maryland.
The average age of a Maryland farmer is 59, meaning that older generations are getting ready to pass down their farms to the next generation.
“It’s a generational change that needs to be addressed,” Lynch said. “People are working later, they’re healthier later, there might not be enough income from the farm to support the entire family so family members might go off. It’s not as obvious now what’s going to happen now when the parents or the owners either die or are ready to pass the farm on.”
Farm culture often perpetuates this issue.
“A lot of farms are owned as proprietorship so there’s no founding documents and a lot of agreements are handshake agreements,” Suri said. “Not a lot of stuff is written down, so if the farmer suddenly passes away, it’s hard to transfer any of those assets as business assets to the next generation, especially if they’re not working on the farm.”
