Dear Michael: We've tried to get ready for retirement as our child takes over the family farm. She is married to a boy who doesn't have much experience with farming, so we've been kind of dragging our feet on transferring too much property to them. They've got a little machinery but pretty much work for wages and a bit of crop share. What happens if something happens to us both prior to us getting a will put in place when we know everything is going to work out? – Waiting on the Will.
Dear Waiting: Waiting on writing a will is like waiting for the right time to have children. There's always going to be a reason not to do something at any given point in time in life – whether it's a decision to have children or writing a will.
If we waited for the 'perfect' time to have children – a time when we have our finances in order, when the bills are paid, when we were guaranteed to have enough money to support more mouths in the house we, as a species, would have died out long ago. Thank God the desire to procreate used to be more important than having financial security. I say used to be because this current generation of kids getting married seems content to wait until the 'perfect' time.
The same is true of writing your will. If we knew what the future was going to be, we would then know when we're going to die. We would just wait until the week before and we'd have a snapshot of our lives to show to the attorney and s/he could draft a will based on the facts at hand.
With the experience I've had in estate counseling, I can tell you even if you knew all the facts at hand and knew you were dying the next week, you still couldn't write the perfect will because your kids would change something – either something minor or something major – in your estate plan AFTER you die.
So what good is it to do a will or an estate plan at all? Well, the alternative is chaos and chaos will be the end of your family farm business.
If you die without a will, the farm assets and liquid assets – if you have any – will be divided equally between all of the children. This will leave your farming child without a home base to work out of because the farmstead will be owned equally by all of your children and the non-farming children don't want to let the farming child get something they didn't get. The same is true with the machinery, the livestock, etc. etc. on the farm.
I've had siblings file injunctions against the farming child to stop farming until these matters are settled legally. What does this mean? It means there is a legal order to stop doing business until all is settled. This might not be a bad thing in December or January but can you imagine having your farm business brought to a halt right now during harvest season? Or calving season? Or selling crops when they should have been sold.
The other matter that happens when you don't have a will or an estate plan is one or more of the siblings are going to have to petition the court to be appointed personal representative.
If we have more than one sibling who wants to be PR in an estate – which you typically do in a farm vs. non-farm sibling – the estates going to have to wait until the judge hears testimony as to who would make the best PR and then it becomes the judge's decision who is in charge of the estate from then on. Once they get the court appointment – which can take up to a year and your farm business has been in limbo for this time – the PR now takes charge of the estate and starts selling grains, livestock, etc.
The best thing to do is visit with someone to help you design a 'what if? will or estate plan. What if the farm child stays with the farm for five years, ten years, or whatever you choose, what would you want them to have in order to be solvent? What if they quit and another child chooses to farm? Who would that be and what assets would they receive? What will the child on the farm receive to survive and what does that leave left over for the other children?
It sounds like there could be a hundred questions to answer – and there is – but once you sit with someone and have these questions dealt with the will, itself, won't be a huge, technical document. It will be pretty much your standard performance contract you'd sign with someone building a steel building for you. When are you going to do it, when is the time frame finished and what's it going to cost?
Waiting for the perfect time, or waiting until your son-in-law proves his proficiency is not the answer. In fact, drafting a document now that allows your daughter and son-in-law to see what is expected of them gives them a future to look at and plan for. It gives them solid ground to move more efficiently into the farm business. You'll get your answers much quicker now if you tell them what's going to happen eventually then if you just let it play out in time.