Avoiding a mistake in law is cheaper than fixing one


Over the years I’ve seen too many farming families make the same mistakes. Here are some of the most common:

Distrust of siblings. A common approach that parents take to creating estate plans is to leave a child in charge of their affairs if they die or are ever incapacitated. Often the other siblings think that the sibling responsible is doing something wrong. This belief is often unfounded – though not always. If you are the sibling in the role, make an effort to keep your sibling constantly informed of what is happening. For most people, sending an email to your sibling isn’t much of a hassle. Parents can also consider having two or more children in these roles so that one sibling has less chance of doing wrong.

No estate plan. Speaking of estate plans, a common mistake is not having one. At some point in our lives we will have to face the fact that we are mortal. For most people, avoiding inheritance is an important goal of an inheritance plan. Estate plans are also more important in second marriage situations or when one child takes over the farm, but the other children do not.

Estate plans should always include powers of attorney, of which there are two basic types: one type is to appoint a person who is empowered to make a health decision for you when you are incapacitated, and the other type is to appoint a person to have the powers has the power to make a financial decision for you if you are incompetent. Without these powers, if something happens to you, you will have to go through an expensive and, in my opinion, invasive legal process to appoint a guardian for you.

Don’t read contracts. Frankly, there are times when you don’t have to read every word before signing a contract. An example could be when you are signing loan documents, but even then it is important to understand all of the key terms. However, in most cases, it is important to actually read a contract you are signing, even if you have a lawyer review it. You should make sure that you understand the key terms. If a contract term is confusing, let it be rephrased. If the other party is pressuring you to sign a contract quickly, it is likely a good sign that you should stop and read it first.

Do not conclude contracts in writing. Oral contracts can be legally binding in most cases, although there may be questions about what exactly was agreed upon unless there was an impartial and unbiased witness. When you hire a contractor to do the work on your home, many problems can be avoided by first writing down a description of the contractor’s work and the price of that work.

Another problem is getting contracts in writing but doing a bad job. An example of this I see is relying on the seller’s real estate agent to prepare the offer to buy. First, it is always important to remember that the agent who is offering the property for sale is working for the seller. Second, I’ve seen too many situations where the buyer wants to add terms after signing the offer but cannot because the offer is already signed. Negotiate until the contract terms you want are the offer.

No title search. Whether you are buying 200 acres of land or a sliver from your neighbor, it is always important to have a title search done. It may seem obvious to do a title search on a large purchase, but when buying a piece of land it can be just as important. If the neighbor you are buying land from has a mortgage, then you will have to partially untie that mortgage from that splinter, or your neighbour’s mortgage will become your problem too.

In most cases, these errors can be fixed. However, the attorney’s fee to fix a bug is usually significantly higher than the attorney’s bill to avoid the bug!

Halbach is a partner in the agricultural law firm Twohig, Rietbrock, Schneider and Halbach. Call him at 920-849-4999.


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