Until the early 20th century in England it was illegal to bequeath your estate to anyone other than the oldest son. This practice, called primogeniture, was customary all around the world. I always assumed it was because people were until then unenlightened, caring less about fairness, and very little about women. I’m not so sure anymore. Of course, I don’t agree with primogeniture, but I can see how it became common practice: it eliminated most of the headaches and heartaches of estate planning today. Nobody could blame anybody – it was the law.
Families have tried alternate ways to be fair and keep estates whole, usually failed and just settled for the least worst. While much has changed, that nearly impossible task has not. There are a few obvious ways to be fair and keep farms together: have only one heir or have a pile of money in addition to the farm, for examples. Those situations are rare. Virtually all farm estate outcomes will compromise fairness and farm continuity, perhaps settling for equal dissatisfaction. It all hinges on how a family defines “fair”.
If this represents fairness and this mug keeping the farm together, the distance between them is how hard it will be for a family to transition successfully. If fairness is defined as equality, that distance can grow significantly. However, if fairness is defined as “something we can all live with”, the odds of finding a solution are much greater. Note both mugs have to move for that to happen. The greater the distance between equality and farm continuity, the more important it is to work to find that acceptable compromise. (View video here)
When estate plans are dictated by the older generation, there may not be any chance to discover that “something we can all live with” solution. It can happen after the older generation passes, but it is a heck of lot easier to find before that time. It can be an emotionally exhausting effort that is easy to postpone. Until you can’t. Once you have been through such a negotiation, you may have a little better understanding of why families have used custom and law to take this decision out of their hands.
In summary, sweat equity is not a thing, on- and off-farm heirs often suffer from inaccurate perceptions of each other, and nobody has found an easy way to preserve both estates and families. When we talk about how hard we work on the farm, transition planning should be our top example.
John Phipps: Major Misperceptions Between Heirs and On and Off the Farm
John Phipps: A Major Misconception About Transitioning the Farm
Source: John Phipps, Agweb.com
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