Farm and Ranch Life by Dr. Michael Rosmann 

 

Prenuptial agreements are becoming more common among people who own a family farm or ranch.

They are especially common when one or both prospective partners has been married previously, when one person has more of the assets and wants to protect them if a divorce or dissolution occurs and when prior promises have to be honored – such as commitments to other heirs about eventually owning certain assets.

Addressing the many social-emotional issues involved in making prenuptial agreements is important, as I know from my experience assisting couples. Licensed attorneys must execute prenuptial agreements in the state where the couple resides, because applicable laws vary from state to state.

A prenuptial agreement is a written contract between two people prior to marriage that lists each person’s claimed or owned property and debts, and plans for their distribution if the marriage ends in divorce or another form of dissolution such as separation, incapacitation or death.

What belongs in the prenuptial agreement is between the client and his/her attorney, as approved by both partners, whose written and notarized signatures signify their understanding and agreement.

It gives advice to the parties involved and to the jurisdictional court.

Is a prenup a good idea for a farm couple? The prenup can help solve disputes when a will is probated and during divorce and dissolution proceedings; however, courts can sometimes set aside prenuptial agreements, and a will can take priority in the event of the death of a partner.

Some lawyers advise that a farm likely would be treated as a marital asset in divorce proceedings even if only one partner brought the farm into the marriage, and more likely if farm bills were paid out of a joint checking account. The partner who did not own the farm prior to marriage could claim half the farm and half its future management following divorce, leading to much interpersonal turmoil for the partners and sometimes, for other loved ones. Other legal experts recommend prenuptial agreements should be part of the farm’s risk management plan. Many of the farm assets, like the equipment and livestock, cannot be liquidated and divided easily following divorce without jeopardizing the capacity of the farming operation to endure.

The legal arguments in favor of prenuptial agreements are that they might lessen disputes when divorce or dissolution occurs. But do they increase emotional tension while the partners are married? Experts disagree.

Not all farmers or landowners should have a prenuptial agreement, various experts say, even if one or both partners owns a farm when they marry. In a November 2011 Successful Farming article, farm business consultant Don Jonovic said: “Agreements are appropriate in a few situations, but they are almost always toxic in most others.”

Instead of providing comfort and building trust, the prenuptial agreement often arouses suspicions; the spouses may ponder how to outmaneuver each other instead of working together to build their relationship and the economic stability of their farming operation.

A Nov. 18, 2014, article posted by agriculture management consultant Mark Junkin on www.agriculture.com suggested prenuptial agreements “may have the effect of making the non-farming spouse feel emotionally disconnected from the farming business because he or she knows that the business is not a joint or marital asset.”

In a 2008 Ohio State University extension bulletin Chris Zoller offers a differing view.  He says: “A prenuptial agreement can help farm and agricultural businesses protect their business assets from a costly divorce. Writing a prenuptial agreement does not mean a couple believes their marriage will fail but rather, they are planning for the continued success of their agricultural business.”

My experience is that every couple is different. Whether they should devise a prenuptial agreement depends on their situation, such as the partners’ trust in each other, their prior histories and their history together.

For most farm couples I know, a prenuptial agreement is – or was – unnecessary because they are mature, loving partners who are able to give and take as necessary. Their respect and love for each other takes priority over the farm business, regardless of who brings more assets or liabilities into their marriage. They work out differences until both partners feel satisfied.

Sometimes the spouse who brings the most farming assets into the marital relationship or who has the most experience farming may seek personal advantage in arguments about the farming operation. This spells trouble. Bringing more assets into the farm couple’s marriage places a burden on this partner to communicate all the more openly so that both spouses share in the decision-making, the risks and their successes.

Uncertainty about signing a prenup may signal uncertainty about whether to cement the relationship through marriage and subsequent life together. Delaying the marriage and seeking psychological and legal counseling are recommended.

Just like farming, marriage takes a lot of work to be successful.

Michael R. Rosmann, Ph.D. is on the adjunct faculty of the University of Iowa, author of Excellent Joy: Fishing, Farming, Hunting and Psychology, lectures across the United States and abroad and owns a row crop farm in Harlan, Iowa.

He is a founding partner of the nonprofit network AgriWellness, Inc. Email thoughts and questions to him, and find recently published columns available for a small fee, through his website at www.agbehavioralhealth.com