“So, you want to protect your farm in case of a divorce, understandably so! Can you do that with a prenup? Yes! If it’s valid and enforceable, and you include the right provisions.”
According to Creating a prenup to protect farm property (Helloprenup.com), with a well-crafted prenup, you can cultivate peace-of-mind and ensure that your farm continues to grow no matter the circumstances.
I am not a lawyer; you need to seek independent legal advice to draw up co-habitation agreements and inter-spousal agreements. These agreements clarify who owns what when two people join their assets together. Many farm couples don’t realize after they have lived common-law for a few years — the timeframe is specific by province — they are “married” in the eyes of the law. Some farm parents are nervous about what will happen IF the next generation couple splits.
Consider ways to approach the conversation about agreements to navigate your family’s expectations while protecting farm assets.
Elaine Froese is an author, speaker, coach, farm partner.
A wealthy panicked elderly farmer asked me to orchestrate a conversation with his successor son and daughter-in law. The father was uneasy about the strength of the marriage.
It took four minutes to determine that both the successor and his spouse were happy to seek independent legal advice to draft and sign marriage contracts. It was intended for the protection and good of all. Crisis averted.
Coaches can help you ask hard questions and give you language to come from curiosity.
In another case, parents grooming their successor engaged the lawyer to get a marriage contract to model this for their successor and his spouse.
The prenup agreement was a condition of the transfer of shares in the shareholder’s agreement.
Are you willing to create an inter-spousal agreement/marriage contract as a risk management strategy for your farm? What do you need to do to get ready to create an agreement?
- You need to know your farm and personal assets.
- You need to be clear about your intent in why this action is important to you for business reasons, and the emotions you are experiencing while creating the document. When we get married, we are not thinking of getting a divorce.
- You need to seek independent legal advice. I asked my network for a great family lawyer who understood agriculture and was able to come up with two lawyers in two places, one for each client. You can start looking in the Canadian Association of Farm Advisors (https://cafanet.ca//af_memberDirectory_custom.asp )
- Your language of approach with your partner, fiancé, or spouse needs to be clear and respectful. Your goal is to have alignment of understanding about your wishes for taxes, assets, financial well-being for all, goals for the children, and business success while keeping family harmony. This seems like a tall order if you approach the conversation in a spirit of fear rather than collaboration. Imagine a young fiancé in tears who did not understand the need for a prenup to marry the dairy farming spouse. Once we framed the exercise of getting a prenup a “business risk management strategy” and not blame or judgment from the future in-laws, the fiancé was able to wipe away the tears and take a different perspective. It was also helpful to the young farmer that the farming brother had just married, and it was the business policy of the farm that everyone has prenups.
- Men with farms are dating women with farms. A young woman in my audience has a dairy farm with her dad and is dating a man who has a farm with his family. People in agriculture are coming together as a family with many assets. This also happens with second marriages. We have “grey divorce”, and we have “grey second marriage” as people live longer and still seek loving companionship. Well written legal agreements can prevent a lot of future pain and anger in court.
- Don’t be cheap. Your current will needs an update. You also need a power of attorney. Spend the appropriate amount of money to hire a reputable great lawyer to draw up proper agreements. Ask to see a sample copy as it is helpful to do some research and find out what clauses are typical for farm situations.
- Pulling in the same direction is a beautiful thing.Think: powerful draft horses pulling hard in tandem! How you frame the exercise of getting spousal agreements in place is like life insurance. We use life insurance as a tool to provide revenue when folks die, or property is damaged. We buy it, and don’t dwell on it every day. The tearful fiancé realized they would be able to be a full business partner with a great attitude IF there was no dwelling on the supposed in-law judgement. The spousal agreements are for protection.
Tell me you have updated your will, and I will send you Farming’s In-Law Factor e-book.
Elaine Froese and her team of coaches are here to help you find harmony through understanding as you transition on your farm. Visit www.elainefroese.com/contact to ask for a free discovery call today!
