Have the Talk

Written by Michael Baron on . Posted in Equalization

Dear Michael: We have a situation that may or may not be unique. We have four children and two of the boys farm. One started farming back when all we could do is help him build his own operation and the other started more recently and hasn’t acquired the assets the first son has.

We are a little bit stuck because we don’t know how to quantify the help we gave our older son – adding to his success greatly in acquiring assets – versus what we should do with our second son farming who hasn’t acquired a whole lot as he’s worked with us. We helped our older son buy land, buy machinery and get established but it’s been years since we helped him. How do we get this straightened out now? – Different Help in Different Eras

Dear Different Help: This situation has always been a puzzler for both my clients and for me to sort out.

Where would your first son be if you hadn’t helped him out during his starting phase or during some of the tough times? Truth be told, he’d likely be out of farming right now rather than amassing the net worth he has now. It seems like the help you gave him twenty years ago doesn’t come near to the value your second son needs today – in pure dollars and cents.

However, if I helped a child buy three hundred dollars an acre that’s now worth fifteen hundred an acre, isn’t that the same as helping the second child acquire that same acre today? Even though the value today appears to be much, much more than what you helped your first son with?

We have to think of this like if it were a gallon of milk or a dozen eggs. We might have paid twenty-five cents for a gallon of milk or a dozen eggs twenty years ago but today those same things cost three to four dollars. However, just because the dollar value rose in the past twenty years doesn’t make the omelet you can make from these any better tasting, does it?

In much the same way, your costs dating back twenty years ago were more near and dear to you than they are today. Also, the son who received your help long ago also had the benefit of owning these assets much longer than your younger son.

However, when it comes to splitting up today’s pie, they only look at the net worth today – unless you sit down with the both of them and have a conversation about the help received by the older one and the help you’ve received from the younger one as he’s helped you in your partnership.

Now sometimes these conversations go pretty good – sometimes you find a lot of things that aren’t being said. But the worst thing is not having the conversation at all. This is a pretty tricky situation to talk about with their kids and sometimes people need me to sit in on the talk and moderate, if you will.

I’ve found, when I sit in on these meetings, both children – when allowed to speak freely and openly – will express themselves how they feel. Eventually, as they talk about what’s right and what doesn’t feel right, they’ll inch closer to a settlement that both of them are happy about.

Other times, I’ve had Dad and Mom just tell one of the kids ‘this is the way it is and that’s the way it will be because it’s my stuff to do whatever I want to” and the meeting ends that way.

Either way, we have an answer as to how things are going to happen when Dad and Mom die. Either way, both children will be faced with this reality and be able to make life decisions towards that eventuality. If there’s a division between them after we have the talk, you have the rest of your lives to get the two boys to understand why you did what you did and see if you can mend fences between the two of them before you die.

This beats the heck out of them both thinking different things until you die – and both being surprised how you decided to do it. And then fighting about it for the rest of their lives.

This is Thanksgiving week, so let’s all give thanks for the bounty God has given us and please, let Him give us the wisdom to handle all of 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
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.