FAIRNESS IS A MATTER OF OPINION

Years ago someone told me that fairness was like pretty… a matter of opinion. Over the years, and several hundred farm clients later, I can tell you that fairness is indeed a matter of opinion in succession plans. The problem is that opinions will vary between husband and wife, brothers and sisters, farming children and non-farming, leading to the inability to arrive at a consensus, which means the plan is never started.

Trying to arrive at fairness will bog down the succession planning process quicker than trying to run damp beans through a combine.  However, it does not have to be that way. For clients that can’t get out of the succession planning barn due to indecision as to what is fair, my advice is to at least get the important parts of succession planning in place. Once that is done, it really opens up the doors to address the issue of fairness. Having the basic parts of a succession plan in place will also pay dividends if unexpected events arise. A few basics that can be implemented that do not necessarily have to consider fairness are as follows:

1. Medical Power of Attorney: Farming is one of the most dangerous occupations.  Having someone designated as your medical power of attorney will avoid a court or hospital making medical decisions for you.
2. Power of Attorney: A POA will allow someone to step in and perform legal and financial decisions for you in case you can’t speak for yourself.
3. Living Will: A living will designates whether or not you want artificial nutrition and hydration in various circumstances.
4. Will: Not having a will almost always leads to unforeseen consequences and family discord.  A basic will at least gets something in writing that will avoid the problems from not having a will at all.
5. Trust:  A trust is a very useful estate planning tool.  Not only does it generally allow for the probate process to be avoided, but it can hold assets after the death of the person creating the trust.  Even if a person cannot decide on the distribution of assets that will ensure fairness, the trust allows assets to be held and then, perhaps, have the non-farm heirs’ interest purchased over time and under a set price.

WHAT IS FAIR?

Over the years, when clients struggle with fairness, I have encouraged them to at least get the above stated basic estate and succession planning documents established. My experience is that once clients get the basic documents in place, then they are more easily able to drill down deeper and tackle the fairness issues. Most importantly, these documents can be amended over time so as to ensure fairness adapts to changes in circumstances.

“…once clients get the basic documents in place, then they are more easily able to drill down deeper and tackle the fairness issues.”

Fairness in estate and succession planning comes in many shapes and sizes. I have had clients treat all children equally, leave practically everything to the farming children, and do everything in between. Getting to fairness generally will require some of the above stated estate planning tools. This is because farm assets are often times difficult to divide, especially among several heirs.

In closing, keep in mind that it is perfectly permissible to put a plan in place that is initially not what you may think is fair to your children or heirs. Once the main components are in place, you can easily modify the plan to get to a point where you do believe fairness has been achieved.

John J. Schwarz, II, is a lifelong farmer and farms with his family near Stroh, in Northeast Indiana and has been an agricultural law attorney for 12 years. He can be reached at 260-351-4440, our contact form, or visit him at www.farmlegacy.com.  These articles are for general informational purposes only and do not constitute an attorney-client relationship. This article and others can be found on Farm World Magazine.