Family farms and ranches are built on generations of hard work, determination and a little bit of luck. Considering all the sweat that goes into building a successful operation it is imperative for the farmer or rancher to have a plan to keep the operation in the family through situations such as death, divorce or dissolution. There are several options and your attorney can help you pick out the best options for you and your operation.
With that said, you must make sure that your plan holds up under legal scrutiny. Otherwise you basically have no plan. Recently, one Nebraska farmer had his plan thrown out by the Nebraska Supreme Court. As reported in this article by Paul Hammel of the Omaha World Herald.
Kevin Mamot was a part-owner of a feedlot, farm and trucking company in St. Libory, Nebraska. Kevin had been living with Valara since 2003 and finally decided to get married on June 17,2006. Kevin suggested they sign a prenuptial agreement and Valara agreed. However, Kevin presented the agreement over a lunch hour on June 12, 2006; 5 days before the wedding and after invitations had gone out and commitments were made for the reception hall, flowers and DJ. Although Valara wanted the agreement reviewed by an attorney, Kevin advised that “we’re not getting married Saturday” if she did not sign it immediately. Surprisingly the marriage did not last.
The Nebraska Supreme Court found the premarital agreement invalid for a number of reasons: (1) Kevin’s threat of canceling the wedding five days before the wedding date essentially coerced Valara into signing the agreement; (2) the inequality of bargaining power between Kevin, who owned and operated three companies with assets of over 1 million dollars, and Valara who had become a housewife; (3) Valara unknowingly waived her right to accumulate any assets during the marriage given her position as a housewife, which defied “the basic underpinnings of the marital relationship”; and (4) Valara was denied the opportunity to have independent counsel review the agreement. You can read the full decision at Mamot v. Mamot.
Prenups are valid means of protecting the farm or ranch that you have built from the possibility that your marriage does not work out. However, the lesson to be learned from Kevin is that you have to do it right and give your spouse the time and opportunity to protect his or her self.