FARMS IN TRANSITION
WHAT IS SWEAT EQUITY WORTH?
BY LEKAN OGUNTOYINBO
As this farm family learned, in estate
planning fair is not always equal
IN NEARLY 40 YEARS as a farmer,
Dave Harper has seen many of his
peers’ heirs get into acrimonious
fights over land inheritance following
the deaths of their parents.
In many cases, he says, on-farm
and off-farm heirs have different
ideas about the size of the property
left them in the will. Dave estimates
that half the farms in their Wheatfield, Ind., community got tied up
in legal squabbles.
Oftentimes things got so bad some
heirs stopped speaking to each other.
Dave, a sixth-generation farmer
who co-owns 8,000 acres of corn
and soybeans with his brother Mike,
vowed things would be different
with his family.
Dave is the father of four children.
Mike is the father of three. Two of
Dave’s sons and one of Mike’s sons
work on the farm.
Dave and his brother are still in
their 50s, but in recent years the pair
and their wives have completed their
estate planning. Transparency and
communication were critical to the
success of the planning process,
says Dave, 54.
“We told everybody there’s no such
thing as a dumb question. Ask whatever you want,” he says.
Dave says it was important to them
to do the estate planning when they
were still relatively young. He says he
loves all his children equally but is
quick to stress: “Fair is not equal.”
HOW IT WORKS
As part of the planning process, the
brothers and their wives split the
company in two: Harper Brothers
54
The younger Harper generation (from left): Darren, Scott and Dane, with elder
generation Mike and Dave. “The three boys work hard on the farm,” says Dave.
Farms, and Harper Brothers Real
Estate, which holds the trust. Dave
says he, Mike and their spouses will
take care of the trust until they pass.
The trust, which can’t be broken up
for the next 90 years, is set up so that
the on-farm kids will rent the land
from the trust.
Dave says the on-farm children
got a significant financial incentive as
part of the planning process.
“The three boys work hard on the
farm. We gave them 4% to start,”
he says. “We don’t look at it as a gift.
They earned every dime. They’ve
been employees since they got out
of college. They deserve to get their
name on the loans. We work well
over 100-hour weeks for months.”
The estate is set up so Harper
Brothers Farms, which is owned by
the brothers, wives and three onfarm children, pays rent to the trust.
“The owners will each get oneseventh,” says Dave. “The rent will be
determined by fair market value. It
should be equitable that way.”
Dave and Paul Neiffer, a CPA
based in the tri-cities in Washington
state who specializes in farm-related
estate and succession planning, offer
some suggestions for planning ahead.
Do your homework. “Find a law
firm that specializes in farm estate
tax planning. Find someone you’re
comfortable with. We interviewed
several firms over several months,”
says Dave.
Communicate early and often.
“Every family is going to be a little
FARM FUTURES | OCTOBER 2014
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