When one or more of the heirs have worked in the farm family business and contributed to the wealth accumulated by the owners how is the heir’s contribution valued? Further complicating the matter is the fact that such contribution may be in made in several ways. For example the farm may have expanded its asset base, added or retained and enterprise, or invested in facilities that the owners would not have otherwise done had the heir or heirs not returned to the farm business.
Often times, as the owners’ age, the on farm heir is the provider of other services such as maintenance on the parents’ house, transportation, shopping, in home health care, management of the owners’ farm business. If the parents were to purchase such services and pay for them at the time they are received it would diminish the value of the estate.
How then is the value of the contribution of the in business heirs to be calculated. Of course, every farm family business is unique as is every farm family, thus there can be no one answer to the question of valuation. The Beginning Farmer Center has developed a case study and spread sheets to initiate the conversation concerning valuation. The case study and spread sheets provide an example and a process to begin quantifying the contribution and are intended to be used as a starting point for the decision on this important issue.
|Conference||2010 National Farm Management Conference|