Emil and Diana Dewald came to see me in 1998 – almost twenty years ago. Like most people, Emil and Diana had no clear plan for their family farm when they first came in other than they wanted to make certain their son, Jeff, got the opportunity to farm.

“The other children certainly helped” said Diana “But Jeff is the one who has stayed with us. His dream is to run the family farm and turn it into an organic farm as we don’t have a lot of land and that’s his best chance of profit”.

Emil said “We’d like to design something whereby if Jeff stays with us on the family farm, he would have to pay less and less to the other children for their share of the land. I think it would be fair if he got a percentage of the family farm for each year he continues to work with us!”

After much discussion with Emil, Diana and Jeff, they came to an agreement that Jeff would receive a reduced price on the farm for every year he stayed with the family farm. It was one of the first ‘years of service’ estate plans I had ever worked on and still remains a stable of what I do today. We took it to an attorney and had him draft it into a will.

Jeff came to me later and told me “Health issues have became a concern for Dad and Mom (Emil and Diana) and we need to do something more to protect the land”.

The will then morphed into a life estate deed to protect the property from possible long-term care. However, the provisions on the original will stayed with the life estate deed and all the children agreed to those provisions by signing they understood there were conditions, as per the attorney’s instructions.

Diana’s health took a sudden turn for the worst and she died leaving Emil by himself. Unbeknownst to many people was that Diana was helping Emil who had begun showing signs of dementia.

After Diana’s death, Jeff and his wife Janet and the rest of the family tried to help Emil as best as they could. For a time they were able to take care of him at home but eventually Emil needed to enter a long-term care facility.

Because Jeff had stayed on top of the ongoing process of estate planning, the long-term care costs did not cause the loss of the family farm. Jeff was constantly checking and calling to make certain things had been done right and understood the concept ‘estate planning is a journey – not a one-time thing’.

As situations changed and evolved, Jeff made certain he – and his parent’s estate plan – changed and evolved with it.

Emil lived for a few years in the long-term care facility and Jeff spent a lot of time dealing with both the facility and Medicaid to make certain Emil received the best possible care. He had both power of attorney and power of attorney for health care for both of his parents and these papers proved invaluable in the process of taking care of his parents.

Many people overlook the fact their power of attorney for financial and for health care needs to be done and updated as needed so the best possible candidates are in position to help when time comes.

Emil died and Jeff – who had always insured that he would be able to buy out his siblings – was able to do just that. His dream of turning the family farm into an organic farm has also been realized as he finally owned the land in its entirety and was able to move forward the way he had hoped.

Jeff Dewald did everything right through a very difficult time period with his parents and the farm economy. He stuck with it through more down times than up but his determination and perseverance paid off. Unfortunately, at the time he was successful in reaching his goals, God had another plan for him and I write this with a sad heart. Jeff died last week of esophageal cancer at the age of fifty-four.

“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

Vernon and Kathy came to me with an interesting problem. They had three children – one of whom was farming part-time.

‘We have two goals,’ Vernon stated. ‘We’d like to see our son, Ben, who is farming part-time be able to take over the family farm operation. Right now he has a great job, but he’s out there every weekend. The problem is his wife likes to live in the city and we know the farm house will never be used. They live only twenty miles away, but we’re not certain he will ever farm full-time. Also, we’d like to make certain that the farm is protected from long-term care costs, if at all possible. We have some savings, but they’d be used up in a couple of years’.

I asked them what price they would ask from their son, if he wanted to buy it from them or if he had to buy it from his siblings. ‘I know land is going for much higher but I’d like to give him a break on it. It’s worth twenty-two hundred now, but I’d sell it to him for one thousand. That’d be the number to use, as well, if he bought it from his two siblings,’ they answered.

This is a classic problem. If the parents sell for FMV, the land is too expensive to pay for. However, if they lower it to an affordable amount, then what is to stop Ben from buying the land for one thousand dollars, paying for the land by subletting the property and letting cash rents make the payments.

Whether that occurs if the parents sell it to him or whether it occurs when he buys from his siblings, it is grossly unfair for Ben to acquire a three million dollar asset and only have to pay one million for it – if he doesn’t actively farm the land. He may just keep his ‘good job’ and never farm.

To cover this, as well as the long-term care issue, we talked about using a life estate deed with conditions on it for Ben.

I asked Vernon, Kathy, and Ben what things they felt would be fair to have in a life estate transfer deed to Ben so it would be fair to all.

Vernon and Kathy stated ‘We’d like to know what happens if Ben decides not to farm and sublets the farm, or what happens if he dies, and leaves the deed to his widow?’ Ben didn’t think it would fair to have the land go to him or his wife if he never actually farmed it.

So I asked Ben ‘Would you agree then, if the deed contained language whereby you would agree – right on the deed in writing – that you would accept the terms your parents are setting for you? Such things as ‘You cannot sublet the farm, you cannot custom farm the entire operation, if you die prior to their death, the property deed will not pass to your widow but will come back into all three sibling’s names?’

In return, Ben wanted to know how he would be protected by inflation and long-term care costs. Vernon and Kathy said ‘How about if we set a price in the deed, allow that any rents paid by Ben to us will be reduced from this price, and Ben will build up credit over the years. If Ben stops farming, then the deal is off and the deed reverts back to all three kids?’

We talked to an attorney who drafted all of the ‘wish list’ into the life estate deed which was gifted to Ben. Ben signed agreeing to all of these conditions, as well as his parents. Vernon and Kathy.

The other children were given copies of this deed so that if Ben should go in a different direction than what he was intending today, they could then proceed to get the deed put into all three names. Not to assume this is an easy task, and enforceability might be an issue in the future, but at least it was there.

The life estate deed, of course, gave some protection from long-term care issues. All in all, after many discussions all the parties – Vernon, Kathy, Ben and the other two children – were happy with the outcome.

“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:

Recently, we have been considering all of the things we have to do before our deaths. My husband is in poor health and there are a lot of things we have yet to do – although for us – we’re not sure of all of those things. Can you give us a quick rundown of items we should check and recheck prior to our health changing for the worse? – Need a List.

Dear Need a List: What an excellent timely question!

You need your basic documents brought up to date:

Your will should be updated to reflect your current desires and wishes for the disposition of your property. If your estate is in excess of $5,340,000, you’ll need to make certain you talk to an attorney now to set up either a disclaimer will or to make certain you claim the first decedent’s Unified Exemption ($5,340,000) by filing an estate tax refund. Even if your estate is at three and a half to five million, make certain you file for this exemption – due within nine months from the date of death – to claim this unused portion.

Your property may not be worth more than $5,340,000 now, but if land and other assets continue to climb, you may find yourself kicking yourself for not applying for this unused exemption. For those more than the $5,340,000 this is simply mandatory to have this done.

You should review your powers of attorney. There are two specific types to review.

One would be the durable power of attorney. This document gives financial powers to someone you trust to handle financial affairs for you. This may be as mundane as paying your heat and lights or as important as selling your farm to pay for medical bills that arise in the future. It’s better to have two people on this document, because with one, you’re always going to have fights about why this one child is running the show, and if you put more than two on there, it’s going to cause problems getting anything done when it has to come up to a vote every time a bill needs to be paid.

Second, you should have a power of attorney for health care. This document gives power to someone you trust – normally your spouse with one of the children as secondary – to make medical decisions for you if you cannot make them for yourself. The secondary POA should be someone who is geographically close to you so they can attend doctor’s consultations in order to make good, sound health decisions for you.

Many people feel like they have this covered with a ‘living will’. However, that is not the case as a ‘living will’ is an entirely different document than a POA for Health Care. The ‘living will’ is another document that expresses your desires and wishes as to how to extend your life – or to not extend it, as the case may be. This document tells both your POA and your physicians how to treat you should you be terminally ill. These things would be the withdrawal of water, or feeding, or machinery necessary to support your life. A new addition in recent years is the verbiage ‘I wish to receive pain medication – even if it should hasten my death – if my body appears to be in pain’. Most people don’t have this in their old living wills.

Last but not least, sit down with your children and have a talk with them about who you put in charge of what and why, and how you expect things to go when you die. You save your children so much grief with one another later if you tell them face to face, amongst all of them, how you want things to be.

I also want to express the grief I feel for the loss of one of my longest tenured friends and clients – Kaye Heffta – who died this past Sunday.

Kaye was many things – a wife, a mother, a grandmother and great grandmother. Just as importantly, she had literally hundreds of ‘dear friends’. Kaye had all these friends because she always gave of herself and never asked anything in return. She never asked for pity with her long illness and stood proud until the moment of her death. If the rest of us were able to give ten percent of what Kaye gave to all the people around her, we would live in a perfect world. I was a recipient of Kaye’s generosity and I will miss her dearly.

“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