Ensuring Continuity in a Time Of Crisis
A recent illness of a family member reminded me of the importance of having the right people in place in a time of crisis, especially in an agricultural context. As a lawyer it has been my unfortunate experience to observe the results of a lack of planning.
An emergency can occur when something unforeseen happens to a farmer, whether due to ill health or accident. As I often say a car accident or stroke doesn’t respect age. If the person affected is the main person responsible for the management of the farm operation, the situation can fast become critical, particularly during planting or harvest. If the disability is serious or a death occurs, it may be impossible to replace the person. Furthermore, during these times, skilled help might not be available or only have a limited ability to assist. Although friends, family and neighbours might well pitch in, paralysis in decision making and other farm issues that may come up may become fatal to the farm operation.
Putting in place a plan, both from a legal and practical point is very important
Putting in place a plan, both from a legal and practical point is very important. From a legal standpoint there will be required either Estate Trustee/Executor in a Will (in the case of a death) or an Attorney (a designated representative) in the case of incapacity. An Estate Trustee/Executor derives their authority from the Will. For most farm matters arising from the death of a farmer, waiting for the Court to issue a Certificate of Appointment (Probate) is not required. An Attorney apppointed by a Power of Attorney will allow the person named to immediately take over and manage the farm operation or hire the expertise necessary (even if costly on a short term basis). In either case, the replacement named has an obligation to act in the best interests of the deceased or disabled party, putting the farmer’s interest before their own.
The choice of a competent, trustworthy person as Estate Trustee/Executor or Attorney having the temperament and skill to carry the operation through to the end of the season (or in the case of livestock until a more permanent solution can be found) must be made while the farmer is still competent to do so. A Power of Attorney cannot be signed unless the signor is competent to do so.
When choosing the Attorney/Estate Trustee to manage the farm operation during an incapacity or due to a death, the following factors, amongst others should be considered:
- How well does the person know the incapable/deceased person, their family dynamics, business views and other wishes and is their management style compatible?
- Does the person live within a practical distance and can they make time for the operation?
- Does the person have the competence, skill, maturity and judgment to manage the farm operation and/or delegate when appropriate?
- Can the person deal with the stress of managing an active farm and all it’s business and legal complexities?
- If this is more than one person, do they get along and how will differences of opinion get resolved?
- Most importantly, will they take on the job as they can always decline to act. Confirming the willingness of the person to act beforehand is vital.
Choosing an unsuitable person merely to not hurt someone’s feelings is a recipe for disaster. A logical unemotional view must be taken in choosing the right candidate, having regard to family dynamics.
To smooth the sudden transition, a written plan should be made by the farmer and updated on a regular basis with notification of where it can be found in case of emergency. Guidance should be given without legal requirements restricting the management of the farm operation. Placing restrictions on power and decision making can result in an inability of the manager/attorney to react to unforseen circumstances.
The choice of individual should be reviewed regularly. Children, for instance may not be suitable when the plan is first drawn but may later mature into the job. Conversely, an unrelated individual will often cause less family friction. Whoever the choice might be, there should also be a back-up person.
The most important point however is to begin to take steps now to set up this contingency plan. At best it won’t ever be needed, at worst it could save the farm.
Published on p.17 of Norfolk Farms Aug 2018
