Dear Michael:

We have an interesting situation. We have one son who left the farm and then came back after ten years (he’s the oldest) and we have paid him wages and let him farm some on his own. We have a very large operation and one of our other sons has decided he would like to join the operation once his dad (me) retires in a few years.

The problem is this: The one son, who has been with us for some time, has a very strong personality, even clashing with me at times. He feels, as the oldest, he should get the farm operation when we die. The other son, who is much quieter, was there when the older son left and helped during those years. He feels, at this point, he could farm in partnership with his older brother, but they have come to blows before about who has the “right” to the farm.

Everyday, there are important decisions to be made on the farm. I can see these two starting out together doing what’s necessary to begin with, but the first time a major decision comes up – buying equipment, land, etc. – these two are going to butt heads in a major way. We’d like to see them farm together, but they are already at odds with one another whenever they are around each other now.

What do you suggest?

– Two Boys, One Farm

 

Dear Two Boys, One Farm:

This is one of those cases where you hope for the best but plan for the worst.

Economically, it makes much more sense for them to share the machinery, share the duties of the farm operation (they probably have different strengths and weaknesses they bring to the partnership) and work together for a long time. I’ve seen it done right and these can become huge operations.

Unfortunately, more often than not, I see these partnerships fail over time. Differences in opinion, differences between spouses, differences in religion and politics – all of them can bring an inharmonious situation to a crashing end. Most of the time, though, it’s just simple human nature to want to make decisions that benefit your family and not have to involve other people or siblings in those decisions.

We all start out as happy families, but as time goes on we each tend to take a different path through life and those varied paths can collide when two are partners in one farm operation.

To plan for the worst, you need to come up with a partnership agreement today – either within your will or, optimally, done and signed today between the two sibling brothers.

The partnership agreement would determine how they are going to farm together, who is responsible for what, or if one of them adds land or other assets to the farm when the other cannot.

The most important part of the agreement is called the buy-sell. This part of the agreement states what happens in the event they don’t get along and they want to split the operation. This is kind of like a pre-nuptial agreement that determines how assets will be split in the event of a divorce.

You’ll need to determine how they’ll split the machinery knowing the machinery won’t be the same in the future, so the ‘how’ is important. You also need to sit down with your maps and determine who gets what acres to own and to farm. You talk to an attorney and have him draft a partnership and buy-sell agreement and make it part of your will.

If you can’t get them to agree to this today, you can make it a condition of your will they sign the agreement or they can walk when you die – it’s their choice.