Farm Estates: How To Avoid A Devastating Family Argument Between Heirs
CAI Auctioneer, Land Broker
Founder, Auctioneer, Broker, and Agent at DreamDirt, Jason Smith is a lead farm real estate professional in the Midwest. He has achieved the pinnacle of auction education earning the CAI designation and is one of only 11 CAI auctioneers in Iowa. Jason graduated from the World Wide College of Auctioneering, and has achieved the PRI designation from the Professional Ringmen Institute. Jason and his wife founded DreamDirt in 2005, and the company continues to be a leader in the farm auction space and prides itself in offering extensive land seller and buyer information.
Email: firstname.lastname@example.org | Phone: (515) 537-6633
SELLING THE FAMILY FARM – ITS NOT EASY
So many people have heard me say “there is no joy in selling a family farm” – I will say that many more times in my life. Don’t get me wrong, I love what I do! But the reality of selling the family farm is a difficult process for the family and heirs involved. In this blog, I discuss the factors that make for a difficult estate sale, and advice I have for families about to go through this process.
FARM ESTATES CAN BE STRESSFUL
Looking back on my career as a land salesman dealing with many farm estates, I can still remember experiencing the first few disagreements between family heirs. They were uncomfortable, they were shocking, and some of them were downright terrifying. I’ve sat at tables in law offices and had books thrown at me, I’ve been cussed out over the phone and in person, I’ve been asked to lie, I’ve been lied to (and about)… The list of negative experiences can go on. As I gained experience, I learned how to better bring these people together, and most of all, I learned how to empathize with each of them.
As a land salesman, I provide a service that often requires something bad to happen first – something nobody ever wanted. Often this event is a death, and sometimes it is debt, divorce or illness. At the same time, I have a big passion for doing what I do and I genuinely love my job. I love to market farms, I love to protect sellers’ interests, I love the thrill of helping people get the best deal… But still, I am often surrounded by clients that are miserable and grieving, not always getting along with their siblings, not sleeping well, and commonly experiencing a sense of doom. Through all of these factors, it’s my job to lead them through what some call one of the most stressful experiences of their life.
The estate-selling experience is often the most stressful for the person chosen to be the executor. They are tasked with choosing the path forward and making difficult decisions. This incredible responsibility not only feels like the weight of the world on their shoulders, but it can easily put them on the outs with some of their siblings. For those that are not the Executor, they may feel slighted if choices were never discussed ahead of time – especially when they feel as if they would have been a better choice.
I’m not a lawyer, financial advisor, psychologist, or miracle worker. I’m just a land broker and auctioneer with a lot of experience dealing with these things in real life. I can never dictate how an Executor should handle the estate, but I’ve found that a somewhat democratic process often provides the best outcome. Will the outcome for everybody always be perfect? No. But family reactions may be less harsh when they have the opportunity to provide input. I have found that completely blocking an heir and giving them zero input often results in increased chaos and constant challenges. Some even become court challenges that only make the process more costly and stressful for everyone.
COMMON FACTORS CREATING ISSUES BETWEEN HEIRS
Previous Event- Unresolved previous events can start things on shaky ground. Maybe one sibling feels like they took care of mom and/or dad more, or that the others skipped on their end-of-life care. I’ve even heard stuff from childhood and teenage years come up.
Sibling Rivalry- When two siblings have notoriously fought about everything, it won’t stop now.
Economic Disparity Between Heirs- An heir with little net worth may be more likely to look for the faster opportunity to liquidate the estate, while those with less financial stress may look for different opportunities for a longer term gain.
Chemical/Alcohol Dependency- Its hard to even describe why or how this affects families, but it more leads to broken promises, dishonesty, and sometimes theft from the estate. Its a scary experience to have a sibling with addiction issues, but it is also extremely frustrating when it affects the estate administration.
Mental Illness- When you have a sibling that struggles with mental illness, you know that nothing is off the table and nothing is predictable. If they are influenced by the grieving at the same time, it can create tensions and fears that are almost debilitating.
Undue Influence- In many cases, one sibling takes on more of the caretaker duties while some contribute none. This creates opportunities for one sibling to benefit from undue influence. When tempers flair in the caregiving years, some decisions can appear to be undue influence while others are blatant cases of it.
Blended Families- For this factor, I was baptized by fire. This was one of my first few sales – I handled the sale of farmland that belonged to a mans estate who had simultaneously had children with two different women for 15 years. It was difficult for everybody involved on both sides. When marriages are broken and step-siblings are heirs to estates, it can be a volatile situation if everybody can’t come together and agree.
Advanced Benefit to One Heir- I see this often when one sibling has farmed the family property at a low or discounted rental rate prior to the death. Some heirs perceive that as an advance benefit which can lead to feelings of disparity.
Estrangement- A sibling you’d thought had denounced the family name can all of a sudden reappear and want input. This is very hard for families going through the estate process.
Some families are able to breeze through the estate process completely in agreement with each other. But it is not unusual for some families to struggle to get on the same track. We all have different circumstances, different backgrounds, and different levels of good and bad relationships. One of the most important elements of getting through a farm estate is to remove personal feelings for others – as best as possible. This process really isn’t about personal feelings but can easily turn into that if focus isn’t maintained.
MAKING THE ESTATE PROCESS MORE DEMOCRATIC
In the past, I have used conference calls and online video calls with families when decisions needed to be made and the Executor was willing to allow input. Sometimes the Estate Attorney will be involved in these discussions as well. These types of conversations can be uncomfortable but the outcome seems to be a much better result.
Setting Ground Rules for Conversations
Discussions that start with a set of ground rules set by the Executor will be the most productive. I have many times suggested the following ground rules:
Everybody must take turns talking. Alternating between birth order and reverse birth order is a fair way to allow comments.
We will only discuss items on the agenda during this call. Nobody will be allowed to refer to some previous wrong-doing or action.
This is not the time for profanity or personal insults of any kind. Using profanity or insults will result in __________________ (Fill in the blank with consequence)
References to others finances is not allowed.
We do not assign blame to anybody for anything.
I know these are your siblings and family members and this may seem silly but trust me, it is valuable to ask everybody to at least recognize the rules. Executors can allow any type of rule, or set any process they wish to employ. For example – let’s imagine there is a question of what to do with the real estate. You might hold it and lease it, you might decide to sell it, or you might set a plan for a future sale. As the Executor, you can decide how the group will make this decision. Does majority rule? Will there even be a vote? Will you just take input and make in independent decision? As an Executor, if you do set ground rules, be sure you can follow them and that you honor what you say. Few things are worse than setting rules but not following them. You’ll soon have a messier situation than you when you started.
YOU ARE NOT ALONE
In the end, the Executor was the person appointed to administer the estate – whether it was by the court or by final wishes. If that is you, you have a great responsibility and will have to make difficult decisions. It is possible that some decisions will be contrary to your other siblings’ wishes. But, you have a responsibility to do what is best for the estate. It is best to consult with your Estate Attorney when making decisions as they will help guide you down the right path from a legal perspective.
A lawyer friend that I have worked with on land transactions once told me, “Jason, you can’t take emotion out of this stuff. The best you can do is to listen, not take sides, and give them the best advice you have. Beyond that its really up to them to work it out.”
I sure understood what he was telling me, but people rarely ever handle an estate more than once or twice in their life. Its my hope that by sharing some of the “normal” situations I deal with, I can demonstrate that your family’s experience is not abnormal. Many family farm sales that I have handled had bumpy roads along the way. But, I think the more people know and understand about it, the better they are able to adjust their approach to it.
I can recall, and genuinely enjoy, those that reconciled during this difficult time. Some families have come together and done the best they could for their parents. Putting differences aside is one of the most honorable ways to honor your parents’ memories. We both know they would never have wanted to create a situation that was hard on their children. The more you can find ways to connect, the more you can find compromises that work for you and the others, the better your outcome will be.
Let DreamDirt help you if you find your family in a situation like this. We have years of experience helping families navigate the stresses of selling the family farm. We are the farm real estate company that eases the burden of selling farm property. We deliver exceptional services that make this process amazingly simple for all parties involved. You can reach us at 515-537-6633
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Founder, Auctioneer, Broker, and Agent at DreamDirt, Jason Smith is a lead farm real estate professional in the Midwest. He has achieved the pinnacle of auction education earning the CAI designation and is one of only 11 CAI auctioneers in Iowa. Jason graduated from...