Splitting up the farm: When family can't agree (Part 2)

The greatest threat to a family farm isn’t always markets, weather, or input costs. Sometimes, it’s family disagreement — and the emotions that come with it.

In this episode of Straight Talk with NDFB, the Harvesting Legal Knowledge series continues with NDFB CEO Jeffrey Missling and attorneys from Ohnstad Twichell Law Firm.

Part two of this two-part conversation focuses on what happens when farm and ranch families can’t agree on the future of the operation and it goes to partition action. When heirs or co-owners disagree, emotions often rise quickly — shaped by years of memories, identity tied to the land, and different visions for what the farm should become.

Ohnstad Twichell attorneys David Piper and Tiffany Findlay explain that while emotion is often viewed as something that clouds judgment, it can also play a meaningful role in these cases. Courts and legal outcomes don’t ignore the human element; instead, emotion often surfaces as part of the story behind why a partition action is being considered in the first place.

Whether you're involved in succession planning, expect to inherit agricultural property, or simply want to understand how shared land ownership can break down, this episode helps unpack both the legal process and the family dynamics behind it.

Links

To watch the entire episode:

Harvesting Legal Knowledge video

Contact our host, Emmery Mehlhoff at emmery@ndfb.org

Disclaimer: The statements made and information provided in this podcast are for educational and informational purposes only. The statements do not constitute legal advice, nor are they intended to create an attorney-client relationship. Every situation is unique, so you should not rely on any statements in this podcast as a substitute for personalized legal counsel. Before taking action or making any decisions which may affect your legal rights and obligations, you should consult with an attorney licensed in your jurisdiction

Transcript

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[00:10] Emmery: What role does emotion play in splitting the farm? Welcome to Straight Talk with NDFB. I am your host, Emmery Mehlhoff. Farming and ranching are tough businesses and legal issues can just complicate things. That's why this season features Harvesting Legal Knowledge, a conversation between NDFB and the Ohnstad Twichell law Firm. 

NDFB CEO Jeff Missling and the attorneys at Ohnstad Twichell break down key legal topics impacting farmers, ranchers and ag businesses every day. In the second part of our two part episode, we'll explore the family dynamics that can lead to splitting the farm. 

When heirs can't agree on the future of the operation, emotions can run high. But while emotion often gets a bad rap, it can play an important role in a partition action and may even influence what happens in court. As always, if you have a specific legal question, be sure to consult an attorney who can address your situation. Let's get into the episode.

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[01:13] Jeff: Welcome to Harvesting Legal Knowledge. It's a collaboration between NDFB and Ohnstad Twichell Law Firm. My name is Jeff Missling. I serve as the executive vice president and CEO of North Dakota Farm Bureau. And with us today, today we have Tiffany Findlay and David Piper. We're kind of talking about real estate, the issue of partition which is dividing jointly owned property. And one of the lead in questions maybe to this topic would be what's a good solution when the joint owners of property can't get along.

[01:44] Tiffany: So I mean all property is unique. We, we don't, we can't put a certain value on every single acreage, even within the same quarter. The valuation and what factors are considered when partitioning out the land are very important. You, that appraisal on what the actual dollar value of the property is, is very useful. But there are other factors that can be considered, you know, like the location of the land, what the use of the land is, you know, who's renting it, who's actually using that land for farming in their practice and in their actual business. Maybe, David, you want to touch on whether the emotional factor is also used with the courts.

[02:23] David: Yeah, that's a great point. The court's role in a partition is to do equity which isn't necessarily equal because equal is not always equitable and equitable is not always equal. So there is case law in North Dakota that says, yeah, we the courts, the judges, we look at a party's sentimental attachment to the land. It's not necessarily the number one factor. It's not necessarily going to have a certain weight or percentage. 

But if you've got someone who maybe is local versus their sibling who, you know, moved with a spouse or whatever to California, Arizona to be someplace warmer for whatever reason. That person who's here, they've got, you know, a fairly decent argument. They've got more sentimental attachment if they do. 

Courts look at other things, like Tiffany said, like who's, who's actually using it, who's farming it. If you've got a large farm and one sibling is actively farming it and they've been leasing out their other siblings interest for, you know, whether it's been a year or multiple years or whatever, that's their livelihood. That matters. 

So the court could look at this is John's livelihood. He's farming. Sister uses this for rent (or brother), John depends on this to feed his family. He depends on this to make a living. She depends on rent to make a living. She could be bought out. 

If John needs everything to keep his operation going, and she could go buy farmland. If farmland is what she wants to be a landlord of, she could use that to, to go buy, you know, nonfarm land if she wants to do something else. But if, if she wants to keep some of it because she's got that sentimental attachment, she still thinks of that as home. She grew up there, it's still her house. That's 100% fair. The court looks at that, and the court should look at that. 

So if John needs 60% or 70% of the land or 80%, but she really wants, you know, part of it because that's, that's her family too. That's where she grew up. You know, the court can look at that and say, okay, we're going to give, we're going to give sister who's not farming, she uses this for rental income. We're going to give her a quarter or an 80 or something, and then she's going to get a cash payment to equalize it. 

So if there's 2000 acres of land and John gets, you know, 1600, she gets 400, and he's gonna have to pay her something to make sure that they both get equal value. So there's tons of factors the court looks at. 

We've seen partitions where one sibling was just a crop farm, the other sibling was just a cattle farmer. And there was a lot more farmland, cropland and less pasture. The court said, okay, this brother gets most of the cropland, this brother gets all the pasture because there's less pasture. He needs that pasture. But this brother still gets some of the crop land because he needs to grow crops for his first cattle. And funny enough, and all that was something that both attorneys tried to recommend. And both parties were angry at each other because there was other things at play. And, you know, they just weren't ready to make that decision. So the court had to make it for them. And that cost them money out of pocket to pay both their attorneys. 

And, you know, the emotion sometimes gets in the way. It's. It's like a divorce. You know, you're...you own this land with your sibling, things go sour for whatever reason, or you just have a difference in how we want to use the land. And when a farmer has been in the family for so long, it's easy for those emotional attachments to, to kind of drive where you go. Yeah. Versus trying to think, you know, maybe more rationally and more critically about what do I need to keep my operation going? 

It's, you know, I did this for mom and dad for longer. I did this and, you know, he was off at whatever, doing something else. And I'm entitled to more. And maybe you are, maybe you're not. That's not for me to say. But the court will look at how can I do equity for both parties here? And that might result in both parties being unhappy to some degree. 

And. And if you can avoid going down that road financially, you're better off. Hopefully it helps you and your sibling be able to mend those fences somewhere down the road. And a trial's not going to help that, you know, and we want to see our clients happy with the result. We want to see them be on good terms with their family because, you know, North Dakota is such a small community.

[06:50] Jeff: Yeah.

[06:51] David: It's in life too short to be thinking about how your, your brother or sister did you wrong and. Or how they did, you know, you did them wrong. So the quicker we can get to resolution that people can live with, the better for everyone.

[07:03] Jeff: I feel like it's kind of smooth sailing for most families until there's some event, you know, somebody passes away. And then you realize what you either have for relationships or maybe don't have. And Tiffany and I were talking about this earlier also about, you know, people, siblings get... they get married, and then you have in laws to deal with as well, and that just changes the dynamic. And you may not even know the thoughts or feelings of a sibling or their spouse until an event like that happens. So it's a tough... it's a tricky issue. And I feel like that first person who passes away, it often triggers then a response or some reaction that you couldn't have anticipated. And that's when you really find out what... what people's thoughts or feelings are. And it can be, it can be great or it can be really challenging, I feel like.

[07:57] Tiffany: Yeah, I mean, we plan and we try to make the perfect scenario for our clients. But I mean, yeah, we, we, we don't have a crystal ball or sometimes our crystal balls are clouded. So you never know what's going to happen and who's going to not get along with who down the road. And yes, we all hope that it'll work out, but in the end, you know, that's why there's a whole separate statute for partitions is because this is a complex matter. 

I mean, two people who are supposed to be owning the same land together don't get along, it has to be handled appropriately. It has to, well, we have to make everyone equitable. I think it was good that you touched that that equitable doesn't mean equal. That comes up a lot, I feel like, in real property ownership because of the, the different uses, the, the different types of topography and, and all the factors that come with owning real estate. It's important to talk with your attorneys about every single situation that, that you have in mind or all of your feelings about your ownership of real estate, because you never know what could come out to play in the future.

[09:03] David: You know, I, I said in the last segment, you know, our, our family farm has been in our family since 1904. I'm, I'm very proud of that. And I, I want it to stay that way. I've got two kids, I've got three brothers. They're all great. We get along great, but we all have different personalities. None of them farm. 

You know, at some point, one of us is going to have to probably consolidate that to keep in the family, because it's staying in our, in our name is very important to all of us. So we don't know how to do that. I mean, I'm, I'm an attorney. I'm telling you, hey, watch out for these pitfalls. And I'm, I'm saying I don't know how to deal with it because every family is different. But it's, it's tough to have those conversations. It's tough to figure out what the right answer is. 

But I think the more you do have those conversations, you know, it sparks, you know, ideas of maybe what could work. You know, none of my siblings farm. I don't farm. But we, we all four agree that we, we Want it to stay in the family. 

Maybe we put in a trust and we, we talk with Tiffany about how to do that and, and what that looks like and how long we can do that for. I mean, is it, is it for a certain number of years? Is it for a number, for a person's lifespan? You know, those are things to know and talk about. 

But I mean, that brings up issues too, because what happens when someone needs money? You know, they. Now, the trust owns it, they don't own it. And you can't sell your interest because you're a beneficiary of the trust, you're not an owner of the property anymore. So that creates another issue that needs to be considered, which again, that's where Tiffany comes in and helps you understand those issues. She can't give you the answer because that's for your family to decide, but she can tell you the pitfalls of the scenario, the benefits of the scenario, and you can work together to try to figure out, okay, how do we want to do this? 

Land prices continue to go up and up and up, and they're going to keep going up. And so land is very, very valuable. It's very expensive. And when there's those high dollars involved, that is very significant issue for many people to deal with. How do we deal with that? Someone wants to retire and they want to, they want to cash their share in, so to speak. And brother and sister, brothers and sisters don't necessarily have a right of first refusal automatically, but you give them a right of first refusal. What happens if you do and they, they don't want to pay fair market value? You know, it's just, there's a lot of issues that can, that can stem. And again, we, we talked about, seems to be our theme now. Our, our unofficial theme again.

[11:23] Jeff: It's huge! Back to this. The, the equitable. We talked about this before. Being equitable. Is an appraisal required for a petition?

[11:33] David: It will be, yeah, because otherwise the, the court needs cover to essentially say, here's the value. Obviously the parties could agree on the value. So I guess if it becomes litigated, yes, it would be required. But if, you know, let's say the parties can't agree, they're, they're trying in good faith to figure out what the value is. Someone's willing to be bought out. Person who's buying it thinks, no, it's, it's less valuable because of X, Y and Z. The southwest quarter floods every five years. There's, it needs to be tiled. Whatever you know, there's issues. And then the other siblings are selling said, well, Dad's been renting that to so and so for X dollars and they're willing to pay more. Like, so there's, there's valid points on both sides. And so if, if they can't agree informally, then yeah, the, the court would hire or appoint a referee. 

The referee is going to be an attorney, most likely, and the referee is going to say, okay, you know, I'm going to interview the parties. I'm going to find out what factors are important to them. I want to get their viewpoint, their perspective, but I also need to find out what the fair market value is. And for that we need an appraisal. We need a certified appraisal. 

And so at that point then maybe the parties say, okay, I may not agree with the appraisal, but at least that's not my brother's appraisal. That's coming from someone who has no skin in the game. I, I can reluctantly trust that, you know, they're not coming out of left field. And maybe that makes the parties more likely to re-engage in some discussions and try to figure something out. But yeah, that's a great question, Jeff. And, and yeah, the, the court, if they get to that point, they would have an appraisal. 

And plus there would need to be one for, you know, a step up basis if, if you're selling it, you're going to be taxed on the, on the gain and the value from when you first got it until when you sell it. You know, that brings up kind of as a, maybe a tangent for later. But you know, if you're looking to avoid that step up, you can do a 1031 exchange which was where you have, you buy other land. It doesn't have to be farmland, but that's that, like I said, that's a tangent. Maybe we'll get into that later.

[13:38] Jeff: So there are so many nuances to each individual piece of land as well. And I think the relationship that's established between the person who farms a piece of land, you, you learn everything about that, you know, by farming it for better or worse. 

And with that, I feel like that might be lost in the court process somehow, that relationship to the land and having that appreciation for the good factors and the bad, the challenging factors of a given piece of land. And so yeah, it's really, there's the sentimental piece, there's the, the actual relationship to that piece of land. The value of it obviously is, is critically important to determine. 

But yeah, I Just feel like there's something special about being on that land, farming it and, or, or grazing it. And you just understand there is a relationship, it's real, you know, and, and that siblings might not even fully understand because they're, if they're not out there every day.

[14:35] David: Yeah.

[14:36] Jeff: And I can see how that could get really tricky.

[14:38] David: Yeah. I. Not to go off on a tangent, but I had a, a three-day partition trial this past spring. My client, there was 4,000 acres between brother and sister. My client was the actual farmer. He had farmed since, you know, he was seven or eight years old with dad and grandpa. And when he was on the stand talking about his connection to land and how, you know, it is a part of him now, he's gonna, he's gonna farm until the day he dies. 

You know, he said, he said it's probably gonna be where he's old and that, you know, he falls asleep at the wheel and hits the telephone pole. And it was, it was, it was hilarious. But he, he, he allowed himself to be really vulnerable and you know, he was getting pretty emotional on the stand about how important it was to him. And I think the judge considered that and making the determination to give him more acreage. 

And the fact it was his livelihood. But both, you know, that the judge could see very clearly that this guy loved this dirt and that it was important to him that his son be able to farm it and that, you know, you know, his son's son be able to farm it and stay in the family. There wasn't that certainty he was going to stay in the family if it went to the other sibling. And the judge thankfully understands this judge how important land is to North Dakota farmers and still gave the other siblings some, but made sure that our guy could still provide for his family, still maintain his operation and still have enough to pass on to his family. Yeah. The sentimentality is a huge factor and it should be.

[16:21] Tiffany: I think for both of us. We have a leg up. We both have those family farm connections and we can see that when, you know, our clients come in the door and we know how to utilize it when, when it does need to come up. It's not something that we try to ignore, but a lot of times, like with the appraisals and with the paperwork, the dollar value, it's, it's better for some clients to at least find some common ground to start at because we can consider the sentimental values day in and day out, but at the end of the day, you know, everyone's going to have their sentimental values in some form or another. It's hopefully everyone's thought that the farm stays together, but in some cases when we're already looking at litigating a partition action, it's just not the case.

[17:11] Jeff: Sure. Thank you, Tiffany. Thank you, David.

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[17:16] Emmery: You've been listening to Straight Talk with NDFB, our Harvesting Legal Knowledge season. To watch the entire interview with Jeff and Ohnstad Twichell, please click the link below. If you have any questions, contact us at emmery@ndfb.org.

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