A reader called to tell me of how he had been ousted from the family farming operation by his father and half sister.
He paid little attention to the various business aspects of the farming operation. He pointed out that he had not completed high school and considered others in the family as more capable of looking after business matters. He stated “none of the assets were in my name so I had no control of the income for paying off the debts” and “Dad verbally promised me my share.” As the dispute escalated, he was not allowed to use the trucks and other equipment. The police told him this was a civil matter. Accumulating debts led to legal actions against the farming operation.
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Vintage power on display at Saskatchewan tractor pull
At the Ag in Motion farm show held earlier this year near Langham, Sask., a vintage tractor pull event drew pretty significant crowds of show goers, who were mostly farmers.
This story is one I have heard before and certainly there is a long list where family farms and other businesses have ended up in court for the judge to sort out.
Can such disputes be avoided? Probably not. But I strongly recommend that families working together have an agreement setting out how the farm will operate.
The agreement should include:
- A record of the assets being brought to the joint operation by each individual.
- How will the assets be owned? Will each individual have ownership of certain parcels of land, machinery or cattle? If so, how will the assets be used by each? How will maintenance of individually owned machinery be dealt with? An alternative would be to incorporate the farm and allocate shares to each individual working on the farm.
- How will farming decisions be made? Will there be meetings to talk about cropping decisions?
- How will compensation be decided?
- How will decisions be made on major investments?
- How will disputes be resolved?
- What happens if a family member wants to leave the farm or a serious disagreement arises and a member wants to leave? How will the departing member’s interest be valued and how will it be paid out?
- What role will spouses play and what rights will they have?
Don Purich is a former practising lawyer who is now involved in publishing, teaching and writing about legal issues. His columns are intended as general advice only. Individuals are encouraged to seek other opinions and/or personal counsel when dealing with legal matters.
