Farm Succession Publications

Valuing On-Farm Heir’s Sweat Equity Is Complicated and Agreements Should Be Developed to Fairly Compensate On-Farm Heirs

October 22, 2018 Mason Grahame, Dale Johnson, Catherine Onumajuru, and Paul Goeringer

Handling sweat equity issues when bringing in the on-farm successor can limit issues down the road where an on-farm heir feels slighted. Image by Edwin Remsberg

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Determining the value of sweat equity can be both challenging and controversial for farm families. Sweat equity arises as an issue when an on-farm heir receives payment at below market rate, and the farm business grows in size due to an on-farm heir’s below-market labors. Land in the farm may also appreciate in value due to the work of the on-farm heir.