Dear Just Got Finished: Currently, I am sitting at my booth in at the Big Iron Show in Fargo for my eighteenth or nineteenth year. As usual, I’m watching all the passer-byes go by – some looking at me, some avoiding eye contact, and others stopping to chat. I feel like the little puppy in the window at the pet store watching the world go by.
One common thread I hear from the people going by is “I’ve already completed my estate planning (two years ago, five years ago, pick your own number) and I worked with this (attorney, insurance agent, pick your advisor) and he did a really good job”. When I ask them how they set things up, most people kind of shrug their shoulders and grin and say, “I don’t really know” or “I don’t really remember”.
Now maybe they’re just giving me the brush off so they don’t have to talk to me, or they are telling me the truth. One thing I’ve found is they truly do believe their estate planning process is done.
Let me walk you through a typical first meeting with my clients. After our initial fact gathering, I ask to see the couple’s wills. Ninety-five percent of the time I see a boilerplate will with a couple written paragraphs deviating from the Wills-on-a-Disc software, which you can buy at Staples or Office Depot. If you’re estate planner didn’t take five to six meetings with you, and your family, to discuss the estate plan, you don’t have an estate plan. True, you have a will, but it’s the same will every other Tom, Dick and Harry has – whether they own a multi-million dollar farm business or a small home in town. Same will – different results.
During this initial (free of charge) meeting, I go through the will with the clients paragraph by paragraph and I explain to them all the legal ‘mumbo-jumbo’, what it means, how it affects their family, and what the outcomes would be in the event of the death or divorce of one of their children – either before or after their deaths.
Most commonly I find people are surprised to find that their in-laws (son-in-laws or daughter-in-laws) can end up owning substantial interest in there farming business. Perhaps this is what they want – but if they have a farming heir who wants to take over the family business, this is a death sentence for the family farm. Even if no one is taking over the family farm, no parents like the thought of an ex in-law having interest in their farm property.
The second thing I fail to see is the continuation of the plan that’s already in place. Maybe you’ve begun transferring interest in your farm business – via machinery pieces or livestock transfers – to the farming child. When I check the will to see if there is anything in the will about how this process continues after death, I don’t see any verbiage to this effect.
What this tells me is if Jr.’s taking over the family farm s/he’s a heartbeat away from having to come up with a huge infusion of capital because most of the heirs to the will aren’t interested in a ‘long-term plan’ to transfer the assets. Once these assets flow to the heirs, and especially with short-term assets – machinery, livestock, buildings, etc. – they want to get their cash value of these assets as soon as possible. Most of them, sad to say, are talking about it on their way home from the funeral. In some cases, that’s an exaggeration – in other’s it’s not only the truth but, in some cases, the discussions have happened before the funeral. You never know how human beings are going to react in any given circumstances at any given time. No one should be judged entirely on one short ‘snapshot’ of a period of life – and often, the death of a parent – especially the second one to die, brings out things in people you never believed existed. This is why I like to explain the will to everyone before you die, so I get that little angst out of the way.
Last but not least, just because you went to an estate planner (attorney, insurance agent, etc., etc.) doesn’t mean that you got the advice – or will – you wanted. Often as I read through the paragraphs of a will to people coming in, they are surprised to find what ‘codified law’ of the state of origin means.
Most boilerplate wills are based on ‘codified law’ (such as North Dakota Century Code) which is essentially the same as if you died without a will. If your ‘estate planner’ doesn’t understand your family farm business, how it works, who it involves, who are all of the possible heirs, and the ramifications of all of these different elements, you probably don’t have a good estate plan. It never hurts to get a second opinion from someone who can explain to you what all of that ‘mumbo-jumbo’ really means in the real world with a real farm business.
Do you have questions about estate planning? Need to know more about how you can “Keep the Family Farm in the Family”? Contact Michael Baron at 800-373-4078.
You think you have an estate plan!
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