Dear Michael: We have been watching the election – like everyone else – and think maybe now would be a good time to see what President Trump does before we complete our estate planning. We have heard there are not going to be anymore estate taxes so we needn’t worry about this in the future. What other good things have we got coming under the new administration? – Looking Forward.

Dear Looking Forward: I think there are many great proposals that were put on the table during the election process. Promises of lower income taxes, repeal of Obamacare, estate taxes being not eliminated, but changed, etc.

We’ll start with the proposed estate tax changes. During his campaign, Mr. Trump proposed that estate taxes are not fair because taxes had already been paid upon the assets – with the exception of capital gains. He thought that if children or other heirs received property and they then sold the property, then capital gains would come into play on the amount the property had increased in value since the time the original owners had purchased the property.

This change from passing ten million six hundred thousand dollars estate tax free to a capital gains tax upon sale by the heirs has been introduced many, many times over the past decade. Perhaps there will be enough partisanship to pass this style of taxation now.

It is going to create an issue for people as they’ll need to keep track of what they paid for property so their children don’t have to pay capital gains if they sell – or at least use this as their basis and only have to pay upon the increased value.

If you sell grandpa’s property, finding out what he paid for it might be a bit of a trick. If it’s not in his papers, you’ll have to check the abstracts. A common method of listing these in abstracts – to make certain the neighbors couldn’t find out what you paid was to state “One dollar and other considerations”. Even in the latest generation, very few people kept real proof of what value they paid for property.

In any case, President Trump has stated he wants to look at changing the tax from one type of taxation to another type of taxation. If you have a taxable estate now, it’s likely you’ll have different, but similar, issues in the future. Your best bet is not to count on the government and do what you have to do to protect your property.

President Trump has already made good on promises to get out of trade alliances by signing bills to negate NAFTA and other international trade agreements. He promises to bring manufacturing back to the United States. How this will affect values on crops grown is anybody’s guess, as exports of our crops to these countries has been the trading chip most commonly used.

There’s also a great deal of talk about lowering the top tax bracket from thirty-nine percent to thirty-three percent. Currently, you would have to be married filing jointly and earning more than $413,000 net to exceed the thirty-three percent tax bracket. If you’ve been saving up grain or have an auction sale, such a reduction might be to your benefit and you might be able to wait until these changes occur.

There’s been a lot of talk and based on the first days of his presidency, President Trump is going to focus on trade talks.

President Trump may also go after Obamacare, as promised during the election process. This is a tricky issue as government mandates during Obama’s time frame forced people to drop their normal insurance and pick up an Obamacare policy. In North Dakota, many of the smaller health care companies up and left the state as they didn’t want to meet these mandates.

For people with pre-existing conditions, the Obama healthcare plan allowed you to enter and buy regardless of health conditions. It’s estimated that forty percent of the people who had healthcare insurance before Obamacare now have healthcare conditions most insurance carriers either would not accept or put riders upon. One hopes that before Obamacare is thrown into the scrap heap that an alternative plan would be offered to those who had to give up their prior health insurance.

All in all, people probably should not depend on the government to solve their estate planning problems. The old adage ‘I’m from the government and I’m here to help you’ should always be taken for what it is. Keep making your own individual plans and if somewhere in the future things do get better, then you only gain more.

“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
Toll Free 1-800-373-4078
Fax 701-255-6106

Dear Michael: We are in between parents in that we have some older children – not interested in farming – and we have some younger children of which one or two might be interested in farming. They are still in middle school, however, so it’s hard to say what direction they may go. We don’t have a will, at this point in time, as we kind of thought we knew how life was going to go, but the older children surprised us by not farming. The younger children are much more involved in FFA and other agriculture pursuits than the older ones ever were. Where do we go from here when we have such young children? – Not Quite Old Enough

Dear Not Quite Old Enough: You have a situation that’s been repeating in cycles over and over again since farming began. If times were bad in farming as your children reached their formative years – ages twelve through sixteen – then these children were exposed to a less than positive attitude in your household, they tend to grow out of farming. If things were positive in your home regarding farming during these years, children of those ages tend to have a more positive outlook on being involved in farming. That’s just life.

In any case, you, as parents, have to determine if you want your younger children raised in the same area as your farm. As such, when you are writing your will for the first time, you’ll have to give much thought to ‘who’ will be the right person or persons to be the physical guardians of your children – if both of you should die.

Ideally, you’d like to name someone who lives close by, who has an agricultural background, and who not only loves kids, but wants to keep your children involved in your own farm – if possible – or in farming as a way of life even though they may not be close to your own farm.

The second part is to put into your will a financial guardian for your children. You’re going to name someone whom you trust implicitly in all financial affairs, as likely this person or persons will have carte blanche access to your assets after your death. I think it’s a good idea to name two people as financial administrators (guardians) for your estate and for your children to provide checks and balances. There are no ‘trust police’ running around making certain trustees, guardians, etc. are spending the money the way they are supposed to.

Speaking of trusts, as long as you have minor children, you’re going to put a testamentary trust in your will to hold assets in the event of both of your deaths. A testamentary trust is a trust created by your will upon your death. It does not exist until you die. Upon your death, your personal representatives will have two things to deal with – your estates (which are a non-human entity subject to taxes, debts, etc. much like a corporation) and setting up this trust. This is simply done by applying for a tax ID number, setting up a checking account for the trust and waiting for the assets to arrive from the estate as they are settled.

You may have the same trustees as you do personal representatives, or they may be different people, if you so like. Some people are closer to the situation in helping settle an estate (P.R’s), but not people you’d like to handle assets long-term (trustees).

Now comes the interesting part – classifying your assets and deciding which are going to be sold (converted to money) and which assets you’d like to hold long-term. If you have young children interested in farming, then likely you’d like to hold your farmland in trust until they reach an age (perhaps 30) to determine whether one or more wants to farm.

If they do want to farm, we have to give instructions via your will to trustees and guardians about how this happens, when it happens, what the other non-farming children will receive vs. the farming child(ren), etc.

Some real time and thought goes into this process but this not only clarifies what your ‘estate plan’ is going to be, it oftentimes clarifies what your ‘life plan’ is going to be with your children. Without such planning, we know for certain your farm and your agri-business will not survive you. That’s too bad because you’ve done a pretty good job of growing it – it’d be a shame to see it go down.

“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
Toll Free: 1-800-373-4078
Fax: 701-255-6106 

Dear Michael: We have been farming for quite a few years now and just five years ago, our son came back to our family farm. Of course, these past five years have been pretty profitable and we bought some land for him to get him going. He did okay the first four years, but last year had a tough time making the payment and we had to pay his income expenses for him? We are relatively young (late fifties and in good health) but we don’t know what to do for sure in our will and our estate planning? Any suggestions? – Just Got Going.

Dear Just Got Going: Your question reminds me that estate planning isn’t just writing down something in a will and hoping it stands the test of time. Agriculture has always been a volatile business and any time you have volatility, you need to make certain your day to day estate plan, year to year estate plan and long-term estate plan are all in sync – especially when things get tough.

First of all, we have to be realistic about what is happening in today’s economy. As long as crops are plentiful and beef supplies are long, the chance of prices rising in the next few years are slim. China has decided to pull back on their imports of all kinds as they take a break from a ten-year record growth rate. The drought that struck the Midwest for the past eight years has broken and crops are plentiful across the country.

With all this in mind, if you have a son who isn’t able to make payments on land he purchased (which you co-signed for) you’re going to have to take a close look at incomes and expenses in the next three years based on today’s prices. If you can’t raise your income substantially to cover expenses, then you’ll have to look at cutting expenses.

People who bought new machinery are still stuck with the machinery payments and there’s nothing to be done there other than use it until times turn. However, if you bought overpriced land, you might have to consider selling the land you purchased in order to make ends meet. You need to have a heart-to-heart with your son about the ways of life and determine if this is your best course of action.

Paying for overpriced land during a downturn is like having a touch of gangrene. You can ignore it and hope that it goes away, but if you do, it can and will spread throughout your entire body of the farm. If you’re in tune with the banker and the banker sees enough equity in your farm operation (and income) then maybe you can take longer to react.

However, if you’ve had a couple tough years and now have to borrow against your equity (in addition to the high priced land payments) then maybe it’s time to think about cutting of the finger or toe before it infects the entire body.

You might also find with your son that he enjoyed farming when prices were good and he was riding high, but a true farmer loves the land and will love the land through good times and bad, sickness and health until death do you part.

If you feel like he’s not that in love with farming and the land, then perhaps it’s time to think about another career for him, and how that affects your overall farm operation.

Too many people wait too long to ‘have the talk’ about farming and its realities, and too often the entire farm go pear shaped by the time both generations finally face the reality of their situation. Be proactive – discuss pros and cons – look at every possibility and steel yourself to make the right decisions in the times to come.

Make sure your wills and other estate plans also reflect these possibilities as you come to terms with everything. Some of you never changed your wills when your child came back to farming or don’t have a will at all. That means your farm operation rests on a heartbeat from going down the drain. If there ever was a time to tie up loose ends, speak honestly and face reality, this would be it.

“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
Toll Free:  1-800-373-4078
Fax:  701-255-6106

Recently, I attended the Country Woman of the Year awards luncheon in Bismarck as one of the sponsors. As I sat through the luncheon and listened to what these rural women do during their days and nights out in these rural areas, it made me tired just to think about doing half of the activities they are doing!

These women – Marie Ackerman – Elgin, Terri Haberstroh – Sarles, Katie Kassian – Regan, Katherine Plesner – Verona, Leann Schafer – New Rockford, and Diane Swenson – Lakota were nominated by family, friends and people in their community for all of the activities they do to make a community a community.

I think the biggest compliment they could receive was to be nominated and recognized for their work ethic by people who actually know them quite well and, obviously, recognize they do things daily to make life better for their family and for their communities. All of them were well represented by family and people from their cities and communities there to give them their support. I felt like I had been wasting half of my time in my life on stuff like sleep and relaxing after I listened to the on-going list of activities these women do every day.

The key-note speaker, Dr. Barbara Handy-Marchello, wrote a book about the early days of North Dakota and the roles women played in making certain small communities were healthy, vibrant and growing. She expressed that many things these early pioneer women did that were heroic and vital to the people around them.

I would say that what country women do today is no less heroic and vital to our rural communities. They are the glue that holds together society. They are the role models for new or beginning country women. They forge a path through times today that are every bit as difficult and stressful as the women of yesteryear.

Sure, these ladies probably never fought a bear or a wolf but the ladies of yesteryear didn’t have any options – it was survive by any means possible or die on the plains. But the ladies of yesteryear never walked out into their yard one morning to discover their husband had just purchased machinery that meant she would have to continue working off the farm for another ten years.

The ladies today do have options and they’ve chosen the option of making the lives of their families and of their family farm productive and healthy. What struck me – as we listened to the bio’s of each nominee – was how in the world the judges could pick just one person out of these six! As I contemplated this, it also struck me that these were only six out of thousands of country women who do what they do without being recognized.

In my line of work – helping with estate planning – I know without country women pushing their husbands to think about the future, estate planning would never be accomplished and family farms would have died by the droves over the past few generations.

I also know that many times, when a couple first arrives at my office, the man can go on and on about things he believes to be correct (usually so far from correct you can’t even see correct from there!). However, with some educational guidance and some information by me, these ladies will go home with their husbands and get them nudged in the right direction. The change from the first to the second to the third appointment with me shows the influence these women have on their spouses. By the third appointment we can see what correct is for this family farm and all the family situations that are unique in their own family farm dynamics. Then we can plan.

To all of the women who were nominated, congratulations. But I know from my experience that rural women are the fuel and the glue that keeps the rural agri-economy going. You all deserve a huge banquet and recognition for all that you do to keeping it all together and moving in the right direction!

“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

Dear Michael: A few years ago, when times were good, our son came back to the farm operation. He had worked off the farm for some time now and got married, had two children and brought back his family to the farm. As part of the agreement for his wife to return to the farm from her city life, she wanted to get a new home built and even now is pressing him to build this new home. We’ve been around long enough to remember the eighties and nineties when times were more than tough and know it’s not a good investment at this time. However, if we bring it up to our son, he shuts us out and we feel like we’re doing something wrong. Any advice on how to handle the situation – Feeling In-Between.

Dear Feeling In-Between: If you keep bringing this up to your son, and he conversely brings it up to his wife, which then creates a weeks’ long battle about ‘what you said before we moved back here’, no one is going to win.

Ultimately, the final word on whether they build a new home or don’t build a new home is going to be based on what the ag lender says, not what you say. If he or she is going to be the bad guy, let them take the job. You don’t need it.

Let them go ahead and set up their plans, check on prices and then sit back when they head to the bank. Of course, in the meantime, you might have a little visit with the ag lender about what your dim views are on spending this amount of money during these times. Make certain your son understands he and his wife are free to do whatever they want with their money – as long as it doesn’t entail you either lending them money or putting your property up for collateral.

Let’s face it – there’s been a lot of kids coming back to farming when times were going good. Some have a level head on their shoulders and understand that like any business – digging for coal, selling oil from drilled land, car manufacturers, equipment dealers, etc. – everyone goes through cycles when they are in business.

For bigger businesses this might mean laying off employees, shutting down plants or other cost cutting measures. Our state, once rich, now has to decide how they want to handle the shortfall they didn’t anticipate by cutting here and there. Of course, making up a shortfall that’s bigger than our annual budget used to be just a few short years ago makes one wonder.

For smaller businesses, it’s as simple as getting lean. When you go to town, you eat at the café rather than the steakhouse. When the equipment would have been replaced, you’re now wrenching in the shop with parts.

You’ll have to determine what you need and what you want. Very seldom are they the same things. You do the things you absolutely need to do – and the things you want to do, you just got to let them go for now.

One thing good times and bad times have in common. Neither one last forever.

For those of you who weathered the eighties and the nineties and hung in there, the last fifteen years have been your reward. If you took that reward and handled it correctly, you’re in a comfortable position. Remember, back then you had to borrow your family living budget three out of ten years so you learned the true meaning of the word ‘budget’.

But just like the eighties and nineties, there are going to be those who fall because they couldn’t get lean enough fast enough. Worse, the ones who never learned how to budget will find out they just can’t live that way and decide farming is not the lifestyle by then. If that’s the case, then it’s better to learn it young and move on then live a frustrating, lean existence until this time passes. If that’s the case, then they weren’t cut out to be small business people – farmers and ranchers – because you know from experience what it takes. Now you’ll find out if your kids have what it takes.

“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

Dear Michael: We have been working with our local property and casualty agent purchasing insurance to cover our estate tax issues. He told us to buy another seventy hundred and fifty thousand dollars of insurance, so we paid him the premium and he returned the policy to us a week or so ago. Do you think it’s the right thing to do – buying life insurance to cover estate tax issues? – Not Sure We Did Right

Dear Not Sure: When you have estate tax issues, you need to follow a list of possible solutions. Life insurance is the medicine you drink when you’ve exhausted all other possibilities.

Estate taxes are based on having more assets than the current five million four hundred and thirty thousand dollars per spouse as of 2016.

Some remedies just take time – such as owning a lot of machinery or grain that you intend to dispose of, transfer, or move during your lifetime. Having these type of assets disappear gradually from your estate may lower your estate values.

Depending on how long you think it might take you to move these items out of your estate, you can take a look at term insurance options to cover the estate tax issues while these assets drop in value to your estate occurs naturally. Most people feel ten to fifteen years would be sufficient.

The other item you can look at is gifting. Gifting is still at $14,000 per person per year (you and your spouse) to any number of people you desire. These can be gifts of cash, machinery, grain, land, or any other farm assets you might have. If you don’t have a sufficient list of people to give to, I can supply you with one.

Charitable contributions upon your death also reduce your estate tax liability. You’ve heard of the Buffets, the Gates and all the wealthy families gifting their vast estates to charities. A couple sometimes needs to decide if they’d rather give to a good cause then give it to the Federal and State governments.

I have had some people who were willing to give so much away to their children or to other sources that they actually impact their standard of living by gifting so much. If this is the case, then this is the perfect situation to use life insurance.

If a couple is gifting so much away today that it’s going to dramatically affect them in the future, then think about gifting to an irrevocable life insurance trust. Just two or three gifts add up to $28,000 to $42,000. That kind of money buys a lot of life insurance for the average couple.

For example, I can give away land to my children but along with this gift goes the income from the land. Now my children have the income and the land but my standard of living has been reduced. If the gift to the life insurance trust was less than the income I gave away from the land, why wouldn’t I take the least expensive and most cost effective route?

Last but not least, you either have to have your children or an irrevocable life insurance trust own, pay for and be the beneficiaries of the life insurance. If you have any incidence of ownership, you are just adding fuel to the fire. Estate taxes are due upon the death benefits – not income taxes but estate taxes – if you have paid for, own, or have any incidence of ownership in the policy.

You can gift the premiums to your children, but as beneficiaries, your children might not be obligated to pay the estate taxes on your estate. One of them might say “Thanks for the money” and leave their siblings hanging with the estate tax debt. That’s when people use a trust.

If you’ve already applied for this insurance, you still have some recourse. You can contact the agent and ask to get your money back. In most cases, you can get all your money back up until thirty days after the receipt of the policy – not the policy date but the day you received it.

Then you can find a qualified estate planning professional who can help you. Obviously your P&C man isn’t up to snuff although this is estate planning 101.

“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

Dear Michael: We have farmed our whole lives and are now fast approaching retirement. Unlike most of your clients, we have no children and no close relatives who are farming. We don’t feel the usual need to make certain our farm stays together for a next generation. We also have been lucky enough – without the expenses of a family – to put quite a bit of money into savings through traditional SEP’s and savings accounts. What are the things we should be worried about in our estate planning? – No Kids

Dear No Kids: Because you never had any children and because you don’t have any heirs that you want to enrich upon your deaths, you need to plan your last years on this planet for yourselves. Of course, everyone is on their ‘last years’ – we just don’t know when that will be.

In your case, you are approaching retirement. This typically means there will be an equipment sale and or a year or two or more of grain sales to deal with. The first year when you don’t have fall inputs to offset the year’s income is IRS painful, to say the least. No deductions, all the income, etc. etc.

To soften the blow, you might consider leasing equipment rather than replacing equipment. Your payments are deductible and when you’re done with the equipment, it goes back to the dealer. Your costs are lower – short-term – than purchasing. If you feel the need to replace something right now, look into leasing equipment short-term rather than buying machinery you’ll have to resell in a few years anyway.

Second, you might talk to your elevator and find out what kind of programs they have for doing deferred payments to you. Many elevators are more than happy to keep your money and pay you a little interest on the amount payable to you until you are ready to take the payments.

For tax reasons, you might talk to your CPA and decide what tax bracket you will be in when you retire. As the income goes up, the tax brackets get wider. For example, the twenty-five percent net income tax bracket is $74,900 to $151,100. If the future average minimum net income you have is higher than $74,900 and less than $151,100, that’s the number you use for taking money from your elevator. You might as well fill up your 25% bracket – especially considering it’s the least you will ever pay and anything over $118,000 is Social Security tax free. If you are already bordering on the SSI cap, it’ll save you an additional 17% by taking the $33,000 difference.

Remember to factor in your Social Security earnings, as well, because if you earn more than $34,500, forty percent of your SSI earnings are taxable as well. For the most part, you have a five year period where you need to play your cards right for maximum return for the five years prior to taking SSI income.

Secondly, you need to take a look at what your savings and retirement funds are invested in. It’s fun to play in the markets when you’re earning money – it’s not so fun to lose money when your income is now based upon it. You might start trending your savings and retirement funds towards more secure investments – such as guaranteed index annuities – where your principal is no longer at risk. These annuities offer income riders guaranteeing higher and higher annual income every year you wait to take the income. Guaranteed income vs. market insecurity?

Last but not least, if you have sufficient money to live on from your farm assets and don’t feel like you’ll need much from either your savings or your retirement funds, you can start transferring some of the taxable investments (again with an eye towards the tax brackets) to either non-taxable (Roth) or to other non-taxable avenues that provide lifetime income, a death benefits to your spouse and long-term care benefits for both of you.

Many people do standard roll outs of their taxable money each year to provide for long-term care benefits, non-taxable savings and a non-taxable death benefit from their taxable accounts.

Without heirs, consider your life ahead and what you would consider luxuries – an income without worry, perhaps guaranteed health and long-term care, if you need it, delivered in the way you would prefer, and peace of mind knowing you’ve taken care of the future you – the one who will now be age seventy, eighty, and beyond.

“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

Dear Michael: We have a good family farm operation. Our son works with us and owns quite a bit of land on his own – although we still own the central properties. He should be able to buy out his siblings share. We’ve also put quite a bit aside into the stock market over the years to go to our non-farming children of which we have two. This sum has grown to a sizable amount – nothing like the farm – but a good amount. We are coming into our seventies now and wonder if the stock market is a good investment for us – and ultimately for our children. Is this a good place to get a good return? – In The Market

Dear In The Market: I can honestly answer you one thing about the stock market and it’s returns in the years to come – no one knows. That includes any expert you want to bring up from Warren Buffet to Jimmy Buffet.

Investment portfolios, over the years, were started by people who were concerned about their retirement income. It has been a good place to put money aside and ride out the ups and downs. The rate of return – for most people with good brokers – has been higher than CD rates – which isn’t saying too much lately.

I think what happens to many people as they go through their phases in life is they forget to change their investments thinking from ‘How much am I going to build up one day?’ to ‘How do I protect this and all of my other assets?’

Everyone should go through a checklist to make certain they are where they should be in their life at any given time.

For example, when I’m young and have debt, I need to check off the ‘If I die, how will this debt be paid off for my family?’

When you reach sixties and seventies, the questions you ask yourself have to shift from building an estate to protecting it. You would have an entirely different checklist to go through.

You might ask yourself ‘Does my farm produce enough income for me and my spouse that we needn’t worry about the future?’ If you can’t, you might think about the fact your lifespan is shortening each day and it might be wise to sell some of your land to your farming son to raise your level of income.

If you have sufficient income to meet your lifestyle, great. Check.

The next item on your checklist might be ‘If we die today or in the future, is their sufficient assets to provide for the non-farming children to give an equitable inheritance to them?’ If not, you and your son need to have a long conversation about what you expect from him to pay his siblings to equal out what you would consider an equitable settlement. Then, if you want to avoid future problems, bring the other children in on the conversation and tell them what you have decided. This keeps Jr. off the hook later when you die.

If you’ve got this handled, great. Check.

Last but not least is having funds like you have now. You’re worried about if they will be enough or continue to grow for your non-farming children? If I were you, I would be more worried if they are still going to be there when you die.

With life spans ever increasing, the percentage of people requiring some type of care – home care, assisted care, facility care – before their death is now up to seventy percent of all people. Many people say ‘Well, I bought nursing home insurance years ago – I’m good’ but what they bought is $100/day coverage when average costs are now at $275.00 per day and growing at 8%. This is like insuring your home for eighty thousand when it will take two hundred thousand to rebuild it. Only your home doesn’t have a seventy percent chance of burning down – but you do.

You should now start positioning your money – if you have sufficient income, got the farm transition handled with your son and other children, etc. – for maximum protection from getting old and the seventy percent chance of needing care. What good is a seven percent return on money that went to pay for long-term care?

As we go through the aging phases of life, we have to address the problems each age brings about. Too many people get stuck in the accumulation phase far too long for their age and end up losing a lot more than just their savings and investments.

“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

Dear Michael: We have been working on our estate plan for the past few months. We have a farming child, who is married and we have three other children – all of whom are coming home for the holidays. Is this a good time to visit with our children about what we are thinking in our estate planning or will it ruin the holidays? – Don’t Want to be Scrooge.

Dear Don’t Want to be Scrooge: This can be a touchy, touchy subject as you well know.

If you are intent on having an open session regarding your estate planning, set down a few ground rules.

One, this is a meeting between you and your kids – period. This is something intensely personal and you might see some emotions that the rest of the in-laws and grandkids don’t have to see – either from your children or from yourselves.

Make sure all of the in-laws and children and other distractions are somewhere where they won’t be a constant interruption. You need to evoke feelings and emotions from your children and it doesn’t help if there are children who keep interrupting the flow of the conversation. Set aside a room where it is quiet, where you can speak and the children can speak about what you all are thinking and want to express.

Make certain everyone understand there are no bad thoughts or feelings about your estate planning. You’re not there to judge and neither are they. It’s a time to express yourself, get whatever you or the children need off of your chest, and once everything is out in the open, then you can deal with the issues one by one.

Explain how important it is to you that the family farm continue into the future, the commitments your farming child has made to keeping the family farm whole, and how you see the future evolving – whether you’re in it or not.

If you cannot get all the children together in one spot – away from the maddening crowd – then see if you can individually talk to your children for at least one hour. Show them your estate plan, what you are thinking, and, again, tell them they can express themselves without fear of judgement by you.

Expect them to say things “Dad and Mom, this is your stuff – whatever you want to do with it is up to you.” Someday you’ll be gone and then it becomes their stuff and you want to know they are on board with the overall plan as to how you want things to work in your estate post-death.

You might also expect things like “Dad and Mom, you’ve helped Jr. out on the farm for so many years, why does he get so much?”

Explain to them how Jr. has committed his life to farming, has helped you grow in your farm operation with his labor, his expertise, his help. Use examples of other farms in the neighborhood, which aren’t there anymore because they didn’t have a child willing to take on the farming business.

All of this requires time to talk to your children and to communicate with them. Some children will be silent, but maybe they are just digesting the information and need time to think about it. Some will be outspoken and against your plan, but it’s better to get that out in the air now rather than after your deaths. You can deal with it today. If your children are coming one day and leaving the next, you don’t have time to squeeze these meetings in. It’s too rushed and too much going on.

Last but not least, if the in-laws want to be part of the discussion, unless they have a vested interest – such as the farming in-law has – then explain that you won’t be sitting in when their parents have such a meeting with them! Sorry, but if you won’t be invited to their meeting with their parents, then the same applies here.

For everyone, keep the spirit of Christmas in your heart. Give thanks for all that has been given to you over your lifetime, and especially thank God for the gifts of fortitude, unwavering commitment to your children and your farm, and for having courage to face what you did to make certain this family and this farm exists today. God’s gifts are all within us, a part of us – not what we have acquired over our lifetime. Pass these gifts on to your children for they are your true gifts.

“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

Dear Michael: We have a time management issue. We know we should be updating our planning but our year to year has changed so dramatically in the past decade. We’re now growing crops that we take off the field later. We’ve also purchased a home in Arizona where we like to go as soon as the crops are in. We come back for Thanksgiving, Christmas and necessary doctors’ appointments, etc. Our son runs the ranch operation during the winter months. Between coming and going, we never find the time to sit down and do what we need to do on our estate plan – Too Busy Snow Birds

Dear Busy Snow Birds: The first thing that comes to mind is you can invite me down to Arizona so I can get out of the cold for a few days. I’m not sure if you want me sleeping in your guest room, however.

The second thing that you might consider is when I work with my clients, they pay me a one-time fee and it’s good for up to two years. On one of those trips back to the northern climes, you can come in and tell me all about your situation – either here in Bismarck, in Minot, Dickinson, Jamestown or Fargo. I’m in each locale every three weeks or so.

The other option is to send your information to me and we can talk on the phone. While you’re down in Arizona, we can visit about your particular situation. But then I have time to do background work for you.

You’ll tell me what you’re thinking but then I call up your son – who’s back home on the farm – and without revealing what your thoughts are – have a long discussion with your son and/or his wife about how they see things coming along and where they want to be in the future.

Estate planning – when there is a farming child involved especially – it’s about understanding what each generation is trying to do or accomplish over time and melding those sometimes different thoughts and desires together to come up with a cohesive plan.

More and more, with land values being high, we’re starting to see people set aside this valuable land in trust so their farming child can use the land for little or no cost over the years following their death – subject to some age limitations – so the land is protected from divorces or deaths of the heirs, etc.

You can set things up so there is no cost to using the land, but if the son changes his mind on farming or if he gets into financial trouble and we discover we backed the wrong horse, then the land doesn’t get sold out at auction or pass to his wife, if he dies.

The age limitations would be something like ‘If Jr. is still farming and he’s been there non-stop and he’s reached the age of fifty, or sixty or sixty-five, then the land goes to him without restriction.’ You know your children’s tendencies and weaknesses – build an estate plan around that.

On the other hand, if I visit with your son and he feels like your holding him back on growing in his farm operation, maybe it’s time to swing some of the land over to his name and he can buy it from you. As long as the price is fair, you’re happy and he’s happy, let him start building his estate.

I run into all kinds of different situations and every family has their own life story and the players in that story. Each estate plan has to be individually crafted to that family, their history and their future.

That’s why I have a two-year contract with my clients. Many of my clients take that long – especially my snow birds – to get this done. But ‘a journey of a thousand miles begins with the first step’ and that step is deciding to get going – even if you feel time is an issue. I think it is better sometimes when you’re away in Arizona to consider all the important issues carefully – away from the farm and away from family distractions.

“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