Dear Michael: We have two sons working on our farm operation. Originally, before they were married, they worked very well together. However, when they got married and started having children, the partnership on the farm has gotten considerably more tense and hard to deal with. Both of our sons bring different attributes to the farm – one is good with books and the automation of our farm machinery and the other does manual labor from sunup to sundown. We see it as a good marriage – but they fight more and more and drag us into these verbal – and sometimes physical – brawls. What should we do in our estate plan? We’d like to see them work together but they seem to be tearing the farm apart? – Torn Between.

Dear Torn Between: When you and your husband began this farm, you were partners in the operation. Being as both of you had the same goals, the same spouse – albeit vice versa – and the same children, it was easier for you to survive the ups and downs of this industry. You were married to one another across many spectrums – goals, children, finances, etc.

Even with all of this going for today’s married partners, fifty-three percent of them still end in divorce. Now, you are expecting a ‘marriage’ or partnership to work, between your two sons, although they both have different spouses who bring in different opinions and needs to the partnership.

You don’t know if they have the same goals and it’s likely they do not. Some families are more ‘income’ orientated and willing to do whatever to make the income complete the lifestyle they’d like. Other couples are more ‘family’ orientated and desire a more quality family life than the income orientated families do.

If you sit down at the table with your sons and their spouses, you can discover what their goals are in their lives –whether income is more important for them or quality of family life in lieu of income is important. You can help them recognize their differences and appreciate what each brings to the table in this partnership or marriage. Then you might have a salvageable situation.

If you discover these two are from two different planets in their thinking and one cannot see or understand what the other wants, then you are dooming your farm operation by forcing these two to work together. They – even though they came from the same origin – are not meant to be together and forcing them to be together will lead to disaster.

Unfortunately, this delayed disaster happens after you’ve either retired and/or stepped out of the management (parenthood) role in the partnership or you’ve died and left it to them to sort it out. Then, watch out, because the gloves will come off and it’ll be bare knuckle fighting until one or both end up on the floor – physically, financially, and emotionally.

Do I think most parents are capable of having this conversation with their children and their in-laws? Maybe one in a thousand parents can have the objectivity to have this necessary conversation. I, on the other hand, get to mediate perhaps twenty to twenty-five of these a year. Of these mediations, less than two or three come to a successful solution – and even those require annual ‘check-ups’ as a reminder of why they are together.

The rest we recognize should not be partners, should not be working together, should not have businesses intertwined with their lives, and cannot survive continuing on together.

For these, we have to give them a time-line as to when they will separate – which might be a time from today like five years, for example, or perhaps at the time of your death or retirement. We then go through all the things necessary to separate these two. We have to split the lands, the machinery and/or livestock, the assets and debts, and who pays who if one wants more than the other, etc. until we arrive at an acceptable agreement. Then, we get them to sign it – in blood if necessary – to make certain someday they remember they agreed to the conditions of this split. Just saying it isn’t good enough – get it in writing.

So, find a good mediator, bring everyone to the table, decide if they can stay together or need to split and then get a business agreement signed by both them and their spouses to the terms of a split. Anything less won’t do.

“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

Hal and Judy Sanders came in to visit with me about their farm situation. I asked ‘How was the Fourth of July?’ and Judy stated “Well, if you wanted to see fireworks, you should have been at our house that weekend. We had all our kids home – along with our farming child – and we brought up the fact that we wanted the family farm to go to the farming son and the rest of our assets would go to the other two children.”

Hal noted, “One daughter said ‘What happens if you go into the nursing home and there is no cash when you die – no other assets left? Does that mean we lose our inheritance and Jim (the farming son) gets to keep his?’ I never expected that from her – although she’s got a husband who keeps asking questions – if you know what I mean.”

Judy said the other son thought he’d like to own some land too. “He wants to do some hunting and he’d like to keep some cows. Now everyone wants a piece of the pie. By the time we got a little into discussing all this, the fireworks were flying all right!”

I told Hal and Judy “It’s a great thing you brought this up now and got to experience what will likely be a microcosm of what will happen upon your second death. However, everyone in the family feels like they own a piece of the family farm for their own reasons, right?” They nodded in agreement.

“When a person feels like they own something and suddenly that something is lost to them, every human being goes through the same steps to deal with this loss – sadness, anger, bargaining, depression, and finally acceptance. They are still somewhere between sadness and anger. My guess is the next thing you’re going to hear is ‘bargaining’ where they come up with an ‘alternate’ plan to owning the farm assets – if you haven’t already.”

“However, if you feel like Jim needs to own the family farm in order to make a go of it in agriculture, you’re just going to have to let your other children go through these steps. Some steps they will pass through quite quickly and others may take some time. But you have set them on the path of the future and the sooner they reach acceptance, the better off everyone will be.”

“If you give in to the anger, or the sadness, and especially the bargaining – when they come up with alternatives for dividing the family farm, you’re likely going to risk the family farm and its ability to function in the future. Imagine if your son, Joey, wanted to run some cows on the family farm. Who’s going to feed them, care for them, house them, etc? Is he thinking Jim would do that for him?”

“Alternatively, if Jim and Joey can sit down and work out a plan now – even if it’s a plan that will likely never come to fruition – about how to run some cows together and who would do what in this partnership and how each of them would be paid – you can eliminate the problem with Joey. Get this agreement in writing, however, as they tend to forget the ‘details’ of the deal they made.”

“Second, sit down with your daughter and explain to her that all of the assets are at risk if either or both of you go into a nursing home. Perhaps a fair agreement would be that if this were to happen, each child would lose a proportionate amount of the assets they received in order to pay for this care.”

“For example, if Joey receives seventy-five percent of the total assets, then he should be responsible for seventy-five percent of the care costs and the other two would contribute twenty-five percent – or their share of the estate.”

We have to recognize people go through all kinds of different emotions, feelings, and sometimes these can turn into fireworks, but with a patient hand and an ability to work out compromises, anyone can make a successful farm estate plan.

“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 talked year after year about getting our estate planning done. Our two boys have worked with us on the farm although one of them has a full-time job, is married, with kids, and our other son is single (getting married) who wants to quit his job and farm full-time if he can with the amount of land we have. We are old enough to think about retiring, but still want to be involved in the farm operation until our sons make up their mind what they want to do. They seem to think they can do a joint venture of some sorts, but we are unsure? It’s a New Year, we need new answers. – Happy Same Old, Same Old.

Dear Same Old: If you haven’t joined the mass exodus to spend winter in warmer climes, then maybe your New Year’s resolution should be to get this done before spring’s work. I find many people put this off during the holidays, and then they try to get around to it for a few more weeks, and then the weather changes and the head shifts over to spring planting and another winter passes without results. Maybe 2014 is ‘The Year’ for finally putting this behind you. How good would that feel? At least when it’s 20 below, you can get something done!

In regards to your sons farming together as a joint venture – with one considering full-time farming and the other part-time farming – it’s kind of putting two horses into the traces with one of them pulling when it feels like it while the other one is pulling for all it’s worth to pull the load. Eventually, and inevitably, the two horses will get ‘snippy’ with one another and try to pull in different directions. This usually ends up with the cart getting up-ended.

If they want to farm together, then it’s time to sit down and work out the rules of their joint venture now – before they even get started. Once you’re into it, it gets harder and harder to separate whose is who’s.  

If the son who wants to farm full-time is more serious about farming, then all attempts should be made to be sure that if they own property jointly – such as farmland – the two agree now as to the terms of what happens during their joint venture and what happens if they decide to split up down the road. Kind of a pre-nuptial agreement for farming brothers before they tie the farming knot.

Such an agreement would have such things as if one brother wants to own his land but not participate in farming, what is the full-time farming brother’s option for renting the land from his sibling? Leaving it at ‘first right to rent’ isn’t strong enough – especially if these two are getting ‘snippy’ with one another at that time. Perhaps you want to specify that it has to be County Average or perhaps you want to get more particular and state that it will be Township Average based on rents paid in the townships where the land lies.

The agreement should also contain what happens to the land should either brother die and their land passes to their heirs. in most states, even if you specify your land is to be sold to the other brother, the spouses have marital rights to claim the property or portions thereof.

Now, all of a sudden, the farming brother could find himself partners with his brother’s wife – who may get remarried to another farmer. Happens – and it’s a disaster in the making. If the brother who was married dies and has kids, does he want his entire share to go to his wife? Without a will, it’s likely it will.

The best thing to do with your New Year’s resolution for 2014 is to get to it. We’ve had the perfect weather – cold, nasty, stuck in the house a lot – for doing estate planning. Some years, like this one, are custom made to do the something very productive for a change – get things down on paper about how things will enfold in years to come.

You have to realize what you do today in your estate plan may not fit everything tomorrow, but it’s still better than leaving it flapping in the wind and ‘hoping’ everything goes well. It’s doubly important now that prices may be changing, and farming may be going through a change in income and expense for the foreseeable future. Find someone you can talk to, get it down on paper, and then everyone can focus on what needs to be done.