Good Times and Bad Times

Written by Michael Baron on . Posted in Asset Protection, General Estate Planning

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

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.