Case #443 – Once Begun

Written by Michael Baron on . Posted in General Estate Planning, Transferring Ownership

Bill and Patty Bridgewater came to see me. Like many farm couples, they had no idea where to start.

Bill said “We’ve just been working at building our farm for so many years we really never paid attention to what would happen to it someday. Most years, we were concerned with farming for another year let alone worrying about a future past that!”

Patty chimed in “During the eighties and nineties, we faced so many different challenges – low prices, high interest rates, no crops – but somehow we made it through to today. But after focusing for so long on keeping going, we’re not sure how to plan to stop. We have absolutely no idea where we go from here.”

This is pretty typical for most of the families who come to visit me for counseling. They’ve been so focused on not going out of business for so long, it feels foreign to do planning for all of the things they’ve built. Many people want to just take a little rest period in between building and planning to stop. However, men are typically sixty-five plus by then and about eighteen percent of them don’t make it through the next five years.

Having absolutely no idea where to go from here is not a great excuse to do nothing and many farm families pay the consequences of not taking some action.

I told Bill and Patty “The first thing we need to do is quantify what you have today. We have an easy to fill out Confidential Survey (click here for link) that lists everything from land to machinery to savings and retirement accounts.”

Continuing on “Now, when you fill out the land value section, there’s going to be three values you can put down. There’s the value your banker thinks it should be, there’s the value you think it should be and then there’s the value of land sold close by you in auction recently. These are going to be widely varying numbers and we can talk about what the value really is.”

“The next item, Bill and Patty, is a simple question. Is someone in your family farming now or have a desire to farm or has everyone gone on to different careers that do not involve farming and no one in your lineage will ever farm?”

Patty said “Our youngest, Sam, has always said he wanted to try farming, but he and his dad could never work together. Perhaps if Bill were ‘retired,’ Sam would be interested in coming back.”

Bill, with a wistful look on his face said “You know, when times were hard, I had to be hard too. I might have, just by my attitude, chased one or more of the kids off the place because I didn’t want them to go through what I was going through. I might have done too good of a job at it!” he said ruefully.

I explained to Bill and Mary “We are all different people at different times in our life. I don’t feel the same way, I don’t think the same way, and I don’t have the attitudes I did as when I was twenty-five or thirty-five or forty-five. I have evolved, changed, learned, learned not to, and so forth throughout my life. I am not the same person I was ten years ago, twenty years ago, etc.”

“The same is true for you, Bill and Mary, and the same will be true for Sam. We don’t know exactly when Sam will get the option to farm. We don’t know what Sam will be facing at that point of his life. Maybe he’ll be ready, maybe he’ll want to stay where he’s at because of what he feels and/or faces at the time, what his wife and children think and these attitudes all change as time passes. The twenty-five year old Sam is going to be different from the thirty or forty-year old Sam.”

“However, if you want Sam to have the ‘option’ to farm, we have to build that into your estate plan now. We have to have some verbiage whereby he can buy the machinery, rent the land or buy the land or somehow acquire this business either from you while you’re alive or from his siblings should you die. If we don’t have the ‘option’ built in, he’ll never be able to farm just inheriting his ‘share’ of the land and be at the mercy of his sibling’s wants and desires.”

“You’ve gone through phases and your estate planning has to keep up with those ‘phases’ as well – just like you do with your crop plantings, new farm practices, and evolution of your farm business. Like everything else, taking the first step is the hardest and things always get easier. To quote ‘A journey once begun is half done’ so just start somewhere.”

“Keeping the Family Farm in the Family”
Great Plains Diversified Services, Inc.
1424 W. Century Ave., Suite 208
Bismarck, ND 58503-0917
Telephone: 701-255-4079
Fax: 701-255-6106
Toll Free: 1-800-373-4078

Michael Baron is not an attorney. Information given through written, verbal, or electronic means by Michael Baron or Great Plains Diversified Services, Inc. is not to be construed as legal advice. An attorney, tax advisor, or other registered advisor is needed for the completion of the estate planning process. An attorney must be consulted for legal advice and the drafting of legal documents.