Many people ask me all the time what kind of law I practice, and they are surprised when I tell them agricultural law. They then wonder how I feed my kids. I also have several clients that do a will or a one-off project and say, “Thanks, but I hope to never have to use you again.” However, I always like to think of the farm’s lawyer as having a long-term role in their operation if its beneficial to them. So here are my five reasons a farmer may need a lawyer:
Annual corporate compliance. Most farms, as discussed in previous articles, are incorporated in some fashion, whether that be a “C” corporation, limited liability company, or a limited partnership. With all those entities, they require different levels of annual reporting and compliance. Specifically, corporations require an annual meeting and thus some level of annual minutes. While I know several of my clients do a set of annual minutes each year, I have a vast majority who have my firm prepare the minutes and file them in the original corporate binder that I maintain. I also have several clients that ask me to sit in on the meeting with the CPA and/or banker. Those clients see a role for me to play in helping to handle some of the complexities that come up on an annual basis.
Estate planning/transition. This is a common discussed topic in Wheat Life, so I won’t go into too much detail. However, it is important to remember that death is inevitable, and if the owners of the farm don’t have their estate plans updated or in sync with the plan, then problems arise. A very common scenario I see is that while mom and dad have their estate plan in order, the kids in their 20s don’t. In that untimely death, the child who is now married and did a simple will from Legal Zoom now has moved his ownership of the farm to his relatively new wife. While that might work out, it also puts unneeded stress on the family during an already terrible time. So, just because your kids don’t have kids, if you have given them some ownership in the farm, make sure they have their wills done!
Real estate issues. Our firm is very strong in real estate matters, whether it is working through an old legal description for a farm lease to buying and/or selling large amounts of acres. Typically, I recommend my clients get their farm lease legal descriptions reviewed or else what they think they have the legal right to farm is potentially owned by the neighbors.
Tax concerns. While we are not CPAs, we do provide a lot of tax guidance including estate tax, excise tax, controlling interest tax, capital gains tax, use tax (I know a lot of my clients don’t believe me that use tax is a real thing), open space taxation, and a few more tax situations. Obviously, we are all taxed past a level that we want to pay, but instead of blindly paying taxes, why not talk to your attorney about some avoidance options?
Alternative energy leases. Lately, we have seen an influx of alternative energy proposals. While these leases are promised to be “form” and “standard” leases, that is anything but true. With the number of companies and the platform of energy including wind, solar, battery storage, and peaking power plants, there really is no one standard lease. Nothing pains me more than a client bringing me a copy of a signed lease that I know they left a significant amount of money on the table. The real heartache is that most of those companies are used to reimbursing some amount of legal fees to review the agreement. If they don’t, that may be a sign to pass on that company.
Lawyers can be as involved or uninvolved as a farmer wants them to be. While I know the idea of paying your attorney for legal work for something you can do yourself is about as much fun as getting hit in the face with a wrench, sometimes, it’s cheaper than waiting until the problem is too big to fix yourself. I always recommend that a client be comfortable picking up the phone and calling their lawyer with a quick question, just to double check.
John M. Kragt is an attorney with the law firm of McGuire, DeWulf, Kragt & Johnson P.S. He and his partners work with farm families and other agricultural businesses for the majority of their needs throughout Eastern Washington. The firm has offices in Davenport, Odessa, Ritzville, Colfax, St. John, Rosalia and Fairfield.