New Years Resolve
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.