Last week, I received a call from an “off-farm” child trying to help her parents with their transition to assisted living. This is call I have received many times, although the details are a little different in each situation, the story is the same. One child stayed on the farm and worked with Mom and Dad while the other children moved away from the farm. As the years went by the on-farm child transitioned from helper to primary operator. Mom and Dad are now elderly and are unable to participate in the physical aspects of farming. Their input into the farm management decisions has been shrinking each year. The on-farm child is now making nearly all decisions. Mom and Dad own land and some of the equipment (often the older equipment) and are essentially in the role of landlord. A crop share agreement has been a great fit in recent years because Mom and Dad both understand farming and can monitor that activities of the farm with ease. However, this role is becoming more difficult.
The next part of the story is typically, Mom and/or Dad have moved to or need to move to an assisted living or nursing home facility. The monthly expenses for assisted living and nursing home care can range from $3,000 to over $6,000 per month per person depending on the type of facility and the care provided. Mom and Dad receive social security but with an average payment of less than $1,500 per month this only partially covers their long term care expenses. Mom and Dad may have some personal savings (IRAs, bank accounts, etc.) that can help pay these expenses. Some have long term care insurance but not all. The next place to look for income is to look at the leasing of their land. In many cases, the on-farm child has been paying Mom and Dad for years on a crop share lease. But now Mom and Dad could really use steady income rather than the variable income a crop share lease provides. This might be the time for the family to consider a cash lease instead of a crop share lease. The change would remove Mom and Dad from nearly all farm management decisions and provide them with a steady income. This type of lease arrangement may also ease the transition after Mom and Dad pass away, especially if the land will be jointly owned by several children. This isn’t the best solution for all families but should be considered as roles within the family change. More information on agricultural leases can be found here.