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Communicate when transferring the title to the home dairy

Elaine Froese Published on 31 January 2013

As a mediator, I’ve seen some pretty dumb agreements about the home yard. When you are deciding to move away or build a second home on the property, make sure you think things through with your lawyer and have some clear conversations with your successor.

Many dairy families have more than one home on the main yard, yet privacy is still an issue that you can design into your plans.

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Ask, “Who owns the home quarter? Who has title?” Hopefully, the founders have it in joint names.

People who were born in the Great Depressions seem to have a great need for security, based on the things that happened to them in their early years.

Some middle-aged farmers are frustrated that the transfer of the title to the home place just isn’t happening. Fathers in their 80s are hanging on to the home place title when their sons are in their 50s.

Recently a lawyer also shared that some folks are not happy about subdividing the home yard due to issues with sharing water and other constraints in some rural areas. Try to think through the downsides and upsides of the yard decisions you are making.

How do you encourage transfer of the title?
The first step is to create a safe place for honest conversation. The younger generation is looking for security and certainty as well. How can both generations achieve that? On many dairy farms, it is the farm corporation that owns the home yard.

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Talk about expectations – that you have already proved your ability to manage and will ensure that the older folks are financially taken care of. Typically, I see the older generation hanging on too long to the home place.

A move to a newer, more physically friendly home would actually be better, but some folks are very stubborn about change. “Nanny suites” for aging parents in a new home built for the successors are another option when relationships are loving and respectful.

Use a good ag lawyer who is an expert about writing out sound legal agreements. Some folks want to be sure they get the title before the parents die and not leave it to transfer in the will.

You can also set up buy/sell agreements for the succeeding generation. I’ve seen messes where two siblings are left to share a yard site.

That is a great recipe for disaster and endless conflict. Yard sites can be built, but it takes 20 years to grow a decent tree, so start planning some new options before you actually need the new space.

Invite a coach or mediator to keep the family meeting safe when you are talking about tough issues. One younger couple I know chose never to move to the home yard, preferring to live at the lake, and let the older folks worry about closing the grain bins and keeping cattle contained. This was a mutual agreement.

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Provide a vision and concrete plan for the parents or founders to look forward to. Assure them of your intent to keep the farm viable and profitable.

Your conversation about the new residence for the founders, and letting go of the home yard is highly emotional. Be sure to be patient to listen to all of the options for resolution, and do some “What if?” scenario planning.

Why is it hard to transfer the home quarter?
It is the fear of not being in control. Or the fear of not having enough equity in the estate. Many older farmers have no retirement wealth bubbles or income streams apart from their land base; they are afraid of outliving their resources.

Sometimes parents are trying to be fair, but in doing so it causes more conflict for siblings who don’t want to share the home yard as business partners.

One shortsighted parent willed the home farm yard to be shared with a non-farming sibling who got the house, while the brother got the farm buildings. This created huge conflict.

Think through the personalities involved, and the kind of conflict skills your heirs possess. I truly believe it is smarter to get these home yard transfers done before death, not after.

What is the reward for transferring land titles while the founder is still living?
The biggest reward is that everyone knows who will be the next owner, and why.

When the farm is to be kept intact, it is very important the successor has control of the land base. If the titles are not in joint names of the founding couple, you better find out what the legal ramifications of this arrangement are.

A lawyer speaking on estates said, “try to get as many assets as possible in the joint names of the couple.”

You likely don’t want to pay the fees and hassle time of subdividing your yard site, but what if your son and daughter-in-law decide to bail from the farm in five years? How can you sell the extra house on the main yard? We’ve seen houses moved to town to fix this disaster.

I’ve seen some horrific scenarios where the successor was forced to share the farm with non-business heirs, which was a complete shock to him.

Most folks who have made a change in their main residence after decades on the farm yard are glad they did, and often say “I wish we would have made the move sooner.”

Don’t split the yard site. Think of the time you need to let go and move further down the road. Discuss the various scenarios of options for the main yard site with your trusted advisors.

Test out living somewhere else for a few months in the winter, and then cut your ties to the main farm yard.

Remember, it’s your farm, your family and your choice. We all have options, but sometimes it is hard to see possibility beyond the shelterbelt.  PD

Elaine Froese is a business coach who helps farm families focus on workable plans for the future. She farms near Boissevain, Manitoba, with her husband, Wes. Click here to contact Elaine or call (866) 848-8311.

Elaine Froese

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