Agriculture Law PDF

Agriculture Law DXP02710 —UN—23FEB11 INTRODUCTION DXP01860 —UN—10NOV10 Farm and ranch managers deal with t...

Agriculture Law DXP02710 —UN—23FEB11 INTRODUCTION DXP01860 —UN—10NOV10 Farm and ranch managers deal with the legal aspect of think. This chapter will help you recognize and understand agriculture on a daily basis. some of these words. Legal documents have words with special meaning. Language in a legal document may not mean what you OUO1023,0002CF7 -19-24FEB11-1/1 CHOOSING COUNSEL rights. It also provides guidelines you can use when you deal with others. You must know the law before it can help you. You have an ally in all legal matters — your attorney. Your attorney It is generally recognized that: is your counsel. He or she can help you when you find it difficult to interpret legal documents. Attorney's fees are cheaper than a court trial. When there are differences of opinion, it is usually less Consult a competent attorney when you have questions, expensive and more satisfactory to compromise than to because ignorance of the law is no excuse. take the question to court. Attorneys can help develop a compromise. This chapter is not a substitute for legal or tax counsel. In Attorneys vary in their competency, as do farmers and this chapter you will learn about only some of the normal ranchers. legal aspects of business transactions such as: Get an attorney you trust. Get one you know you can Contracts go to when you have problems. Get an attorney who Legal liabilities of farmers and ranchers knows his or her own limits and who would not hesitate to Farmer's rights refer you to someone else when he cannot answer your Insurance questions or take care of your problems. Tax-sheltered retirement plans Estate planning You should know enough legal facts to help you make sound decisions. You must realize the law protects your OUO1023,0002CF8 -19-24FEB11-1/1 10-1 090117 PN=154  Agriculture Law SOURCES OF LAW For example: The Horse Protection Act, passed by Where does the law come from? There are four sources Congress and signed into law, makes it illegal to use which have produced the laws that hold our society painful devices to enhance a horse's gait in the show ring. together: Another example is the city and state laws that regulate dairy products. Custom (People) Lawmaking Bodies (Legislature) JUDGES Judges (Courts) Administration (Government) The law is constantly being reinterpreted and opinions from judges are put on record. They are used in future CUSTOM court cases by other judges to establish precedents. These precedents may become common law. Rules that develop through custom and usage often become statutory law. Judges may use these customs ADMINISTRATIVE RULES as guides when they make court decisions. When this happens, custom becomes “common law.” These are passed by government regulatory bodies. The courts and people in administrative positions interpret For example: Treaties and trade pacts are forms of them and give them strength. international agreements often based on the customs of the people involved. For example: The Internal Revenue Service develops interpretations of income tax laws. Some of them apply LAWMAKING BODIES especially to farmers. They are published in the Farmers Tax Guide. The Congress and city and state legislatures write statutory and constitutional laws that affect farmers and ranchers. OUO1023,0002CF9 -19-24FEB11-1/1 WHERE TO FIND LAWS Articles in newspapers and magazines You have a responsibility to know the law. You must know Governmental agencies where to find the laws in force and how they have been Federal, state, county, and city officials interpreted. Here are some places to look: Reports and fact sheets Examples include the Cooperative Extension Service, Attorneys Doanes Agricultural Report, Kiplinger Agricultural Letter, Law books in your local library and bookstores ProFarmer, and IRS Publications Statutes OUO1023,0002CFA -19-24FEB11-1/1 10-2 090117 PN=155  Agriculture Law WRITTEN VERSUS ORAL AGREEMENT The Statute of Frauds requires that certain contracts be Farmers and ranchers have traditionally relied on the oral written. The following kinds of contracts usually must be agreement and a handshake to “close a deal.” In most in writing: cases a handshake is fine, and an honorable farmer or rancher will live up to his part of the bargain. Every agreement, promise, or contract to pay commission for the sale of real estate. The oral agreement and the handshake can be a problem Contracts for more than one year. if the situation must be reconstructed later to settle a Promises to be responsible for debt, default, or disagreement. Oral agreements are particularly a problem misdoing of another person. if the transaction was done years before. If one of the Agreements, promises, or undertakings made upon the parties should die before performance and payment under consideration of marriage, except the mutual promises the contract, it is difficult to verify the agreement. Statutes to marry. sometimes require that certain types of contracts be A promise of an executor or administrator to pay debts written in order to be enforceable in court. of the deceased out of their own property. Contracts for the sale of goods above a certain value These difficulties are obvious to a legal mind. What is unless a portion of the price is paid or a part of the perhaps less obvious is just what an agreement must goods delivered. In some states there is no dollar have to be a contract. agreement. In others, the required value of the goods varies from $30 to $500. WHAT IS A CONTRACT? Land leases. A contract is a legally enforceable arrangement or BREACH OF CONTRACT agreement between two or more parties. Failure to comply with the terms of a contract is known as TYPES OF CONTRACTS a breach of contract. In the event of a breach of contract, Contracts are of two types: the injured party may: Expressed — Parties state the terms of the contract Request completion or payment of compensation orally or in writing. (damages). Inferred — The actions or conduct of the parties indicate Be entitled to specific performance of the contract. an intention to contract. Specific performance is when the court requires the other party to carry out the contract. THE ELEMENTS OF A CONTRACT Agree in advance to the amount of damages to be paid Under most state laws, four elements are essential to if the contract is breached. This is called liquidated have an enforceable contract: damages. Request the contract be canceled (rescission) and There are two or more legal parties. The parties must whatever has already been provided be returned have the legal capacity to act. They must be mentally (restitution). competent. They must be of legal age under the state law. RISK OF NONPAYMENT Offer and acceptance. This is evidence that all parties The sale of farm commodities is a contract. In every sale intend to be bound by the agreement. This usually there is a risk of nonpayment. takes the form of an offer or proposal by one party, which is accepted by the other party or parties. Payment for the sale of farm commodities is not Sufficient consideration. This is usually the promise of necessarily guaranteed. Don't take payment for granted. each party to fulfill the contract. Consideration may be There is always a risk of nonpayment until you have money, goods, or a promise for a promise. Contracts the cash in hand. No law completely eliminates the which lack consideration may not be enforceable. risk farmers and ranchers take when they deliver their They must not offend public policy or morals. Contracts commodities to dealers, warehousemen, and buyers. are not enforceable if they are for unlawful or immoral acts. Risk of nonpayment arises in at least three common situations: STATUTE OF FRAUDS Where crops or livestock are delivered and sold, but There is a law called the Statute of Fraud that requires payment is not received. certain arrangements or agreements to be in writing to Where harvested crops or livestock are contracted for be enforceable. later delivery. For example, when Ann's parents decide to sell their Where harvested crops are delivered for storage only. house, they sign a real estate contract with the real estate In each instance, the producer has handed over, or broker. This is called a listing. The listing spells out contracted to hand over, their commodity before payment. exactly what they are contracting to do. The producer shares in the risk that the buyer may go bankrupt before the payment is made. Continued on next page OUO1023,0002CFB -19-24FEB11-1/2 10-3 090117 PN=156  Agriculture Law REDUCING THE RISK Depending on the distance to the bank, checks can “float” for a week or more. The longer it takes for the check to Laws help reduce the risk of nonpayment. In the case of clear, the more time the buyer controls your commodity livestock, the Packers and Stockyards Act helps protect and your cash. the farmer or rancher. In the case of crops, state and federal licensing laws help reduce risk. You can still lose FORWARD CONTRACT your commodity and money. There is a bankruptcy risk in a forward contract. As For example, federal regulations under the Packers and a general rule, if you sign a forward contract, you are Stockyards Act require livestock buyers to pay producers obligated to deliver the kind, quality, and amount of by the close of the next business day after delivery. The livestock or grain contracted within the time specified. In regulation is of little help if you accept a check drawn return, the contract buyer is obligated to pay the price on a distant bank, or allow a buyer to defer payment, agreed upon. You may be legally entitled to payment, but or otherwise fail to demand immediate payment upon this is no guarantee the buyer will not become insolvent. delivery. The buyer may take your commodity, use it, go bankrupt, Recently, several states passed legislation setting new and never pay you. bonding requirements for livestock buyers. State and Davis Meat Packing Company declares bankruptcy. The federal agencies with their inspections and regulations court that handles the bankruptcy forces Tom Mann to can reduce the risk you have when you deal with buyers deliver cattle he had sold in a forward contract; however, of farm commodities. To reduce the risk you must get your the purchase price for the cattle becomes an obligation or payment when you deliver. No one can do it for you. debt of the bankruptcy estate and Tom Mann is now a DELIVERY WITHOUT PAYMENT creditor of the bankruptcy estate. Creditors very rarely receive 100 cents on the dollar in bankruptcies. The Get your hands on the cash immediately. Checks are not settlement works out in bankruptcy court to $0.30 on the cash payment. You don't have the cash until the buyer's dollar. Tom gets 30% of the forward priced value of his check clears his bank and the amount is credited to your cattle. account in your bank. To make matters worse, he owes some bills to Davis FLOAT Meat Packing. The court makes him pay his bills “in full” before he gets his $0.30 on the dollar. If you owe a bill to Avoid checks from distant banks. By using distant banks, a bankrupt firm, commodities contracted cannot be used buyers have the use of your money interest free while to offset the bill. checks are in transit. This is called a “float.” A locally drawn check might clear the same day, but by using a The bankruptcy law requires the court to collect all bills distant bank, the buyer can issue checks against funds due and apply the proceeds to outstanding obligations. that do not exist. They count on having money on deposit Then, they can pay Tom Mann. Tom had to wait until the at the time the checks clear. Through the use of this bankruptcy case was settled before he received his money. “float” a company can operate on a substantial amount of interest free money. If the market price falls below the contract price, the trustees in bankruptcy may refuse delivery under the Don Bennett of Waco, Texas, sold cattle to a buyer from contract. This would leave you with your livestock or Detroit. The buyer paid with a check drawn on a bank in grain, but without the benefit of the favorable price Detroit. The check never cleared. By the time it got to you contracted. You can assert your claim for the lost Detroit the buyer was out of business. Don gave away his profits, but with the buyer in bankruptcy, your chances cattle. The check had too much FLOAT time. An attorney for recovery are not good. Don knows advised him to insist on a certified check, cash, or at least a check from a local bank for payment on his next sale. OUO1023,0002CFB -19-24FEB11-2/2 10-4 090117 PN=157  Agriculture Law STORING CROPS SAFEGUARDS Always get a price on your ticket at a grain elevator. Crops and livestock are the same as cash. Shield them as Ralph Martin takes a load of grain to an elevator though they are cash. Consider the following safeguards: for storage. Ralph wants to store the grain until the price goes up. Ralph receives a scale ticket marked Deal only with licensed warehousemen, brokers or “STORAGE” “NO-PRICE” from the elevator. The elevator dealers. has economic problems. When Ralph and some other Don't be deceived by the size or appearance of the farmers want their grain, there is none. The elevator sold company you deal with. Even though companies are their grain illegally. Ralph could not prove the value of the inspected, many changes can take place between grain. He lost his entire grain crop. inspections. Investigate the financial condition of the buyer before WAREHOUSE RECEIPTS forward contracting. If you deal only with a local dealer whose performance depends in turn upon If there is a grain shortage, you will have the greatest the performance of another buyer, you may want to protection if you have a warehouse receipt issued by research the buyer's abilities also. the grain elevator. Always get a warehouse receipt and Demand a scale ticket marked “sold” or “storage” with a scale ticket when you store grain. There may not be each load of grain you deliver. enough grain on hand to satisfy holders of warehouse Demand payment immediately by a check drawn on receipts. A warehouse receipt gives you the best a nearby bank when the delivery is completed. If you protection you can get. deliver grain over a lengthy harvest season, get a partial A warehouse receipt proves you are entitled to the goods payment prior to the completion of the delivery. it represents. If the warehouse receipt is negotiable, you Get a warehouse receipt immediately if you store crops. can sell it. Warehouse receipts also are good collateral Be on the lookout for practices that indicate financial for loans instability. Report them to the appropriate licensing agency. OUO1023,0002CFC -19-24FEB11-1/1 10-5 090117 PN=158  Agriculture Law LEASES AND LEASING Susan can make this kind of lease because she has a Leases are the legal agreements landowners and friendly relationship with her landlord. Also the landlord farm operators use to do business. About 1.5 million lives on the property and does most of the management landowners and farmers in the U.S. deal with leasing for her. She learns a lot in the process besides getting a each year. share of the returns. A lease may be oral or written, long or short, adapted Landlords like the livestock share lease because: or not adapted, and as a written instrument it may be valid or invalid. Well written farm leases can lead to They retain an active interest in management. better understanding and closer cooperation between It encourages more efficient use of resources. landowners and tenants. There are several kinds of It generally makes more returns than other leases. leases you can use. Low quality crops can be used effectively. The most common kinds of farm leases are: Tenants like a livestock share lease because: Cash The risk is less because the payment is based on the livestock enterprise production. Share They can gain experience from the guidance of a Manager operator or partnership (sometimes called successful owner. profit sharing) The landlord is more willing to make improvements. CASH LEASE It requires less of the tenant's capital. A cash lease is the most common type of lease. CROP SHARE LEASE Bob Sallee uses a cash lease when he leases grazing land A crop share lease doesn't require much capital for the for his cattle. He and the landowner set a fixed price per person leasing the land. acre when they make their deal. This is a good lease for: Ken Bartlett leases crop land in northern Missouri. Any small farm. Ken is a new farmer, and he doesn't have a lot of A landlord that lives a distance away from the farm. capital to invest. He signs a crop share lease with an A tenant like Bob who has adequate livestock, older landowner who contributes some management equipment, and working capital. knowledge. The landowner also pays for a percentage of the seed, fertilizer, and chemicals. Ken pays a percentage A cash lease is good for livestock grazing because it is of the harvested crop to the landowner. This is the most simple, and reduces the chance of controversy. Bob can common lease arrangement in the United States. feed his cattle from what the farm produces. Crop share leases are adapted to: The landlord may prefer a cash lease because there is: Areas where land is good and nearly all tillable. Less risk and guaranteed income. Young tenants and new farmers with less capital. Fixed rent. Less supervision by the landlord. The landlord likes a crop share lease because: On the other hand, a cash lease may not always be best There is more opportunity for supervision of the land from the standpoint of the landlord because: than with a cash lease. The landlord can help manage the control of erosion, fertilizer application rates, and It generally provides lower income. make sure the land is not abused. It gives the landlord less control of the land. There is more probability the rental may come closer to It is difficult to collect rent if crops fail. the value of the land than other leases. The tenant may prefer a cash lease because: The tenant likes a crop share lease because: It will provide more profit if the enterprises are It requires less capital than a cash lease. successful. The landlord is more inclined to improve the farm and The tenant can expand the size of the business and increase productivity. lower fixed costs of the lease. There is less risk exposure on cash outlays if the crop LIVESTOCK SHARE LEASE fails. The landlord shares the risk as well as the returns. A livestock share lease doesn't require an investment in equipment for the person leasing the land. Susan Hill hasn't built up the equipment and working capital to raise livestock that Bob Sallee has. She prefers a livestock share lease. Continued on next page OUO1023,0002CFD -19-24FEB11-1/2 10-6 090117 PN=159  Agriculture Law MANAGER OPERATOR OR PARTNERSHIP LEASES Disputes may arise over the system of accounting (records). The manager operator or partnership lease is an The landowner bears most of the risk because of their agreement where the landowner and tenant specify in asset exposure. The tenant on the other hand has only advance what each will furnish, and how the returns labor at stake. will be divided. The landowner usually furnishes all the capital, while the manager furnishes the labor. Normally, LEASING MACHINERY the manager shares in returns on the basis of a fixed percentage — usually 35 to 40%. This is sometimes Ken Bartlett, the young farmer we met earlier who leases called a profit-sharing lease. land, also leases a combine to harvest. Ken feels he can get more control over costs by harvesting his own grain Terry Hirt and his son Mike have a manager operator than having it custom harvested. lease. This is common among family members in the United States. Mike (the tenant) provides all the work and Ken signs a financial lease for a combine. Under the does the everyday decision making. His father, Terry, lease Ken must use the machine for at least one harvest provides the long-range management, the capital, the and can return it. After the life of the lease, the option of land, the livestock, and the equipment. They share the taking ownership exists. Ken must: profits on a 60/40 basis at the end of the year. Make an annual payment for the machine. Some basic suggestions for this type of lease are: Make repairs. Do the maintenance. Separate living quarters for each of the families. Provide shelter for the machine. A good set of records. Types of leasing: A farm business large enough to support two families. Ability to get along together. Financial lease (one year). Revision of the agreement from time to time. Operating lease (extended period). After a few years under this type of lease, the tenant Ken could have made another deal. He could have signed usually prefers, and is able, to switch to a regular crop an operating lease. Under this lease he would have share, livestock share, or cash lease. The tenant may be had to keep the machine for more than one year. Ken able to make more returns in these situations. Some may would not have been responsible to do repairs, except for become full partnership agreements. negligence, but the savings were not worth having to keep Except for a parent-child agreement, this type of lease the machine and be locked into the payments. is normally not too satisfactory and should be avoided because: OUO1023,0002CFD -19-24FEB11-2/2 10-7 090117 PN=160  Agriculture Law INSURANCE FOR THE FARMER OR COMMON KINDS OF INSURANCE COVERAGE RANCHER Insurance helps to financially protect your business and Without insurance, few of us could bear the risk of fire, family. The common kinds of insurance coverage include: accidents, lawsuits, and a death in the family. When Ken Bartlett's leased combine burns in the field, Ken is glad he Life insurance. This helps protect your family against had insurance to pay off the lease company. Ken looks loss of income because of your death. at insurance this way: Accident and health insurance. This helps protect you against the expenses arising from illness and accident, When he takes out an insurance policy he is paying a as well as against loss of income because of illness professional risk taker (the insurance company) a small and accident. but regular sum of money (the premium) to assume the financial burden in case of the unexpected. Property insurance. This gives you protection against financial loss if property is damaged, destroyed, or WHAT ARE THE USES OF INSURANCE? stolen. Liability insurance. This helps protect against lawsuits if There are several uses of insurance: you cause personal injury or property damage. It protects you and your family financially and lessens POINTS TO REMEMBER WHEN BUYING INSURANCE the hardship of unexpected economic loss. When you buy insurance remember: Examples: Damage or loss from fire, flood, tornado, lawsuits. Insure against those losses that may lead to financial disaster. It meets your obligation to others who might suffer injury Insure the irreplaceable or the most necessary property or loss because of something you did. first. Example: It pays for damage to another's car if you run a Don't insure anything you can easily afford to replace yourself. stop sign and hit them. Be sure the coverage is adequate. Property such as It makes it possible for you to take certain risks you your house may go up in value. Insurance coverage otherwise could not take. that was bought five years ago may not be adequate to replace your house at today's costs. Example: You might want to buy a $100,000 farm but Buy insurance that provides coverage for situations in have only the $20,000 down payment. You might be able which you are likely to have a claim. to borrow the remaining $80,000 on the condition you take out a term life insurance policy that will pay the lending Examples: Flood insurance if you live in a low-lying area agency the remaining balance on the loan if you die. Your near water; liability insurance if you employ people and family will not be financially devastated. own land; all-risk crop insurance if you are in an area where it often hails during harvest. OUO1023,0002CFE -19-24FEB11-1/1 10-8 090117 PN=161  Agriculture Law LEGAL LIABILITIES OF FARMERS AND RANCHERS As a farmer or rancher, you must realize that laws can affect your livelihood more than they do the average citizen. This is especially true regarding liability. If a court judgment for damages is awarded, the negligent party DXP01729 —UN—10SEP10 must pay the damages. If they don't, their property may be seized to pay the sum awarded the injured party. Farmers and ranchers are especially vulnerable because most of their net worth is invested in agricultural land. If a farmer does not have the money or sufficient liability insurance coverage, they may lose their entire farm or ranch. Fig. 1 — Negligence is irresponsibility Liability insurance does not eliminate loss, but it does reduce risk by substituting a small, regular payment Although courts have given many definitions for (premium) for a large uncertain payment. negligence, it is generally considered to be the omission by an individual to do something which a “responsible NEGLIGENCE person” would do under similar circumstances (Fig. 1). In most cases liability depends upon negligence. The fact Another definition is failure to use reasonable care under someone is injured on a farmer or rancher's land does the circumstances. not make the farmer or rancher liable. Before the farmer Examples of negligence may include the failure to repair or rancher can be held liable, there must be negligent a hole in the barn floor, or keeping fences in such poor action or lack of action on their part. This also is true for repair that livestock can roam free. an employee engaged in work on the farm or ranch. OUO1023,0002CFF -19-24FEB11-1/8 LEGAL LIABILITIES WITH RESPECT TO LAND The landowner or occupier of land (tenant) owes one kind of duty toward their adjacent neighbors, and a different set of duties toward people or property actually on their land. DUTIES TOWARD PEOPLE OR PROPERTY ADJACENT DXP01730 —UN—10SEP10 TO YOUR LAND For the property or person next to his land, the farmer or rancher must exercise reasonable care to prevent injury or property damage to a neighbor. For instance, Sue Johnson, made an excavation near her property line which caused her neighbor's land to cave in. She may be liable to her neighbor for damages. Another example is a Fig. 2 — You are responsible for your own property coal company that tunnels under farmland and causes it to sink. The owner of the land may be entitled to damages for the loss of lateral support. Lateral support is the right A farmer or rancher's duties toward persons on his land to have land supported by the land which lies beside it. can become complicated. These people may be divided If you have a defective building and a strong wind blows into three groups: some of the pieces into your neighbor's crop land, then you may be liable for damages. You must keep your own Invitees buildings in good repair. You should repair or tear down Licensees the building before the incident (Fig. 2). Trespassers The courts have frequently had difficulty deciding which of DUTIES TOWARD PEOPLE ON THE LAND these fits specific people coming onto farm property. Continued on next page OUO1023,0002CFF -19-24FEB11-2/8 10-9 090117 PN=162  Agriculture Law Invitees A person who is on your farm with your consent and for your benefit, or for your mutual benefit, is an invitee or business visitor. Examples of invitees are someone who DXP01731 —UN—10SEP10 comes on your farm to buy garden vegetables and eggs, or a hunter who pays a fee to hunt. You have responsibilities to an invitee (Fig. 3): First, you have a duty to warn invitees of known hidden dangers. You are liable for any injuries they may suffer from these known hidden dangers. Second, you have a duty to inspect your property for Fig. 3 — You must inspect your property and warn invi- tees of potential hazards hidden dangers. For example, Brad Simpson is a feed dealer's employee. He delivers a load of feed and falls through a rotten board You also probably wouldn't be held liable if the defective on the steps leading to the feed room in your barn and is step is not discovered when you make a reasonable injured. As a business visitor, he has implied consent to inspection of the premises. be on your property. You receive some benefit from his Other examples of invitees are people who deliver presence because he delivers your feed. You are liable for supplies, salesmen, the postman, repairmen, independent his injury unless you had warned him the step was rotten. contractors and their employees, and prospective buyers. On the other hand, if Brad knew about the dangerous A social guest, though invited, is not considered an invitee. step, and you could prove it, you would probably not be held liable. OUO1023,0002CFF -19-24FEB11-3/8 Licensees Someone who comes onto your land solely for their own pleasure, benefit, or convenience is a licensee. This visitor is tolerated rather than invited. A licensee has a legal duty to be on the lookout. If they are careless in this respect, then you are not responsible for any resulting injury. Your duty to the licensee is to warn them of any hidden dangers you are aware of. You have no obligation to make the land safe for the licensee, nor must you inspect the property to locate dangers (Fig. 4). DXP01732 —UN—10SEP10 Someone who has permission to hunt but does not pay a fee to do so is a licensee. So is anyone who does not enter the land at regular times, such as social guests. Someone who initially comes on the property as an invitee may become a licensee while still on the land. For example, Brad the feed dealer's employee, who came to deliver the feed, becomes a licensee if he uses your telephone to make a private call. For the time he is going to and Fig. 4 — Your duty is to warn licensees of any dangers that you know returning from the phone, he becomes a licensee because he isn't doing what he is invited on your land to do. Continued on next page OUO1023,0002CFF -19-24FEB11-4/8 10-10 PN=163 090117  Agriculture Law Trespassers Someone who is neither invited nor desired on your land is a trespasser. Because the person is a trespasser, you are only liable for personal injuries if you intentionally inflict them. You do not need to make the land safe for a trespasser. You have no duty to warn a trespasser of hidden dangers or search for dangers for the trespasser (Fig. 5). DXP01733 —UN—07SEP10 You may use reasonable force to remove a trespasser from your property. Unless your life or the safety of your family is threatened, you may not use a deadly force to remove a trespasser. Deadly force includes any type of force that could cause death or serious bodily injury. DETERMINING IF A VISITOR IS A LICENSEE OR A TRESPASSER Fig. 5 — You have no responsibility to protect the safety of trespassers Visitors may have either your expressed or your implied consent to be on your land. and you do not tell them to leave, then they are not a trespasser. They have your implied permission to be With expressed permission, you actually tell the visitor, there. If they are injured by a hidden danger that you verbally or in writing, they have your consent to be on your know of, you may be liable for personal injuries. You are land. If you give expressed permission, the visitor cannot liable even though you gave no expressed permission be a trespasser unless you retract permission. Also, if for them to be on your land. you see someone on your farm without your permission, Continued on next page OUO1023,0002CFF -19-24FEB11-5/8 10-11 PN=164 090117  Agriculture Law DOCTRINE OF ATTRACTIVE NUISANCE Your responsibility to children is greater than your responsibility to adults. The doctrine of attractive nuisance DXP01734 —UN—10SEP10 charges you with a greater duty to prevent injury to children. If you negligently keep an object or condition on your land that is attractive and dangerous to children, you will be liable if a child is injured by that object or condition (Fig. 6). For this doctrine to apply: The landowner must know children trespass where the object or condition is located. Fig. 6 — An attractive nuisance invites injury and liability Attractive nuisances include discs, plows, old cars, combines, old tractors, buildings under construction, and piles of lumber, posts, and old refrigerators. EMPLOYEES If children can see the object, it may arouse their childish If you, as an employer, direct and control a person's tasks, curiosity and attract them. If the children are injured on the that person is an employee. A general farmhand, with object that attracted them, you are liable for their injuries. little training and whose work is supervised by you is an employee. Usually the doctrine of attractive nuisance does not apply to natural conditions on your land, such as natural ponds. Of the three legal classifications, an employer has the However, the law has different views as to whether the greatest degree of control over the employee, and the doctrine applies to constructed ponds. greatest liability for their actions. NO TRESPASSING SIGNS For example, if your employee throws a rock at a steer and injures it while trying to drive a neighbor's cattle out Mick Davenport tacked up no trespassing signs around of your wheat field, you may be liable to reimburse your his recently constructed pond. Mick thought they would neighbor for the steer. keep out unwanted visitors. The signs probably did keep out a few. You might fire the employee out of anger, or require the employee to reimburse you, but you would be liable to Mick also felt the signs would relieve him of responsibility your neighbor. if someone did trespass. As far as adults are concerned, the signs are evidence he doesn't give permission to Federal laws which apply to agricultural labor: enter. What about someone who can't read or doesn't see the signs? Or what about someone who doesn't Fair Labor Standards Act The FLSA places restrictions on minimum wages, really feel the signs apply to them? Courts have been maximum hours, and child labor. known to rule in favor of a trespasser under these special circumstances. If children are involved, signs seldom Migrant and Seasonal Agricultural Worker Protection Act The MSPA provides the guidelines employers must protect the owner against liability. meet in protecting seasonal or migrant labor. LIABILITIES OF EMPLOYERS Immigration Reform and Control Act The IRCA imposes penalties on employers who hire If you hire people to work for you, you may be liable for illegal aliens. the acts of the employees as well as for injuries to them. Occupational Safety and Health Act The extent of a farmer or rancher's liability depends on OSHA was enacted to provide safety in the workplace by the control that they have over the employee and the legal eliminating or reducing potentially hazardous conditions. classification of the person employed. We will discuss the Injuries to Employees three legal classifications: If employees are injured on the job, they may try to sue you for compensation. They will try to prove a Employees connection between the injury received and the working Agents conditions. You can prevent successful suits by initially Independent contractors meeting your responsibilities as an employer. Continued on next page OUO1023,0002CFF -19-24FEB11-6/8 10-12 090117 PN=165  Agriculture Law For example, make sure shields are on PTOs so that employees can't get caught in them (Fig. 7). Train your employee thoroughly. Teach the employee how to correctly operate your machinery. Explain that it is necessary to keep all machine guard shields in place while operating your machinery. DXP01735 —UN—10SEP10 As an employer, your responsibilities to your employees also include: Provide a safe place to work. Provide reasonably safe tools, machinery, and equipment. Warn and instruct the employee of dangers which they could not reasonably be expected to discover. Fig. 7 — An employer must make sure that proper guarding is Provide competent fellow employees. in place at all times on such things as PTOs Make reasonable rules for the conduct of the employee while at work. AGENTS Failure to face these responsibilities could wipe out your business. An agent has the authority to either transact business or manage the affairs of the employer. The employer has a WORKERS’ COMPENSATION INSURANCE lesser degree of control over an agent than an employee. An example of an agent is a hired farm or ranch manager. In most states, farm and ranch employees are exempted from workers’ compensation. There is a good reason You, as the employer, are responsible for your agent's acts for the exemption in agriculture. Workers’ compensation while the employee is doing your work. The authority may automatically makes the employer liable for most injuries be expressed or apparent. For example, Dick Davenport suffered by an employee in the course of employment, gives his ranch foreman, Mike Henson, $100.00 to buy whether the employer is negligent or not. In some Vet supplies. situations, the employee may be negligent. This plan assumes the employer is always responsible for the injury. Mike keeps the money and charges the supplies to Dick's Also, an employee covered by workers compensation account. In this case, the veterinarian called Dick, and may not sue the employer for negligence. The employee they settled. The veterinarian could have sued Dick for the is bound to take the amount established in the official bill if Dick hadn't paid, because Mike had the authority to schedule. The established amount may not equal the legally bind Dick to the account debt with the veterinarian. disability of the employee. Farm and ranch employers may elect to come under workers’ compensation statutes by purchasing a standard workers’ compensation insurance policy. Continued on next page OUO1023,0002CFF -19-24FEB11-7/8 10-13 090117 PN=166  Agriculture Law INDEPENDENT CONTRACTORS An independent contractor is a person or organization performing a job without control from the employer. The employer only determines the results (Fig. 8). You, as an DXP01736 —UN—10SEP10 employer, have no control over the method used to do the job, Examples of independent contractors are: A custom harvester A crop duster A well driller For example, Floyd Ernst hires Hemmingway Crop Dusting to sulphur his table grapes. Joe Hemmingway Fig. 8 — An independent contractor is hired to do a job usually drives out to a prospective site with his wife Lorraine, sets stakes as markers, checks for hazards, As a general rule, the employer is not responsible for the and evaluates possible hazards. Then, when Joe flies on negligent acts of an independent contractor. But there the material, Lorraine stands on the ground with a flag to are exceptions: mark each pass. This time, however, Floyd interferes. He insists on handling the flags. In the process Joe is Negligence in selecting a competent contractor misdirected in the dusting and sulfur drifts onto a nearby Furnishing a contractor with faulty plans or specifications pasture. The sulfur kills several calves. Floyd is liable Interfering with the contractor for the cost of the calves. He misdirects an independent Hiring an independent contractor to perform a task contractor and interferes with the contractor's established which is inherently dangerous (example: aerial work procedure. application of pesticides) OUO1023,0002CFF -19-24FEB11-8/8 LEGAL ASPECTS OF FENCING Most states have laws that govern boundary fences. In some states, the fencing regulations are left largely to local government. Although laws vary widely from state to DXP01737 —UN—10SEP10 state and are subject to change, the following conditions usually prevail: Inside fences — No stipulations are usually made for materials used on inside fences. Boundary fences — Some state laws require landowners to enclose their land with a fence tight Fig. 9 — Boundary fence laws vary from state to state enough and strong enough to turn livestock (Fig. 9). Responsibility for division fences — People build fences between their property. Each owner usually pays half. Check state laws — If you build a fence, check the laws This is usually the half on their right-hand side as they first. Most states have a definition of a legally recognized stand looking at the fence division line from their own fence. It is expensive to correct your mistake. property. Continued on next page OUO1023,0002D00 -19-24FEB11-1/3 10-14 090117 PN=167  Agriculture Law LIVESTOCK AND FENCES Although state laws vary, there are some common laws that affect the use of livestock fences: In most states, a livestock owner who maintains good fences, is not liable for damage caused by livestock (Fig. 10). In this case, the owner must not be aware DXP01738 —UN—10SEP10 the animals are in the habit of breaking out, and must make an immediate attempt to retake them when they do break out. When animals break through an adjoining owner's part of a division fence, and the fence is not in good repair or is not legally sufficient, the owner of the animals cannot be held liable for their trespass. Fig. 10 — Keep fences maintained An owner of trespassing animals may be held liable if: The owner's animals are in the habit of breaking out, knowing there was a hazard on the road. However, some regardless of the condition of the fence. states may call the motorist liable because the motorist The owner's fences are defective or insufficient. should try to reasonably avoid obstacles in the road. The Negligence such as leaving the gate open causes the point is, the cattle rancher, Betty, is not responsible for trespass. the car damages because she did her job correctly. In Animals that are driven along a road get out of control this case, Betty's insurance company and the driver's and enter adjoining fields, even though the road is not insurance company paid for the cost of the accident under fenced. their “no fault” clause. Bill Burris faces a liability action. He accidentally left his Summary of fence laws: ranch gate open one night. Thirty head of Angus strayed. They grazed down the road, got spooked by a coyote, If a farmer or rancher is negligent in maintaining their and proceeded to destroy a tomato field leased by Jean fences and their animals escape, then they can be held Smith. His negligence makes him liable to Jean for the liable for damages resulting to people using the highway. value of her tomatoes. If a farmer or rancher maintains fences in good repair, but has animals that are in the habit of breaking out, ANIMALS ON HIGHWAYS the farmer or rancher may be held liable for damages caused by the animals. Sometimes farm animals stray out of their pasture onto The owner may be held liable for damages caused if roads and highways. If a driver on the road runs into a the owner knows the animals were out and made no loose animal and is injured, or the vehicle is damaged, reasonable effort to get them back in. This happens they may try to collect damages from the owner of the even if the fence is in good repair and the animals are animal. The animal owner may try to collect from the not in the habit of breaking out. driver. Although state laws vary widely, the following If animals are driven on a highway, and if the owner is general rules are covered in this next case study. careful, then the owner is not liable for damages. Stock Betty Green has a herd of Herefords that are well tempered crossing signs usually increase the caution exercised and have never broken out. Betty keeps her fences by the motorists. maintained and checks her herd regularly. She is careful. HANDLING STRAYS One night someone driving too fast on the road that runs along Betty's north fence line drives their car into the Strays (or estrays) are domestic animals, not including fence, knocks down a couple of posts and causes a gaping dogs and cats, of unknown ownership that are running hole in the fence before it comes to a stop. The driver, a loose. Laws have been made to provide for them: stranger unaccustomed to cattle country, drives off. Either landowners or local authorities may confine such A car hits one of Betty's steers that wanders through animals and care for them. the fence break. There is considerable damage to the A reasonable attempt must be made to locate the owner car. The motorist is not injured, but the steer died. Who of strays. is responsible for the cost of the car repair and the cost The finder is entitled to make reasonable use of strays of the steer? while they are in their custody. Example: Milk a cow. Betty Green is not responsible. She has no reason to When the owner comes for a stray, the owner must pay the finder for feed, housing, care, and other costs. believe there is a break in her fence. Her cattle have no history of wandering. She has a reputation for checking If the owner does not claim their stray animal, it either: her fences and cattle frequently. The motorist who hit the steer may not be liable either. The motorist had no way of becomes the property of the finder or Continued on next page OUO1023,0002D00 -19-24FEB11-2/3 10-15 090117 PN=168  Agriculture Law must be sold at public auction.A reimbursement is made to the finder for expenses and the balance is put into county funds. OUO1023,0002D00 -19-24FEB11-3/3 PEOPLE INJURED BY ANIMALS An owner of animals (Fig. 11) may be held liable for personal injuries caused by them under these circumstances: When the owner negligently allows or causes them to DXP01739 —UN—10SEP10 commit the injury. When the owner is aware that it is a vicious animal, and when the vicious animal inflicts injury upon someone who is not acting negligently. Examples include: biting dogs, wild animals such as a bear or lion kept as a pet, boar, bull, horse, rooster, or any animal capable of inflicting injury that has a known Fig. 11 — The owner is liable for vicious animals and vicious nature. OUO1023,0002D01 -19-24FEB11-1/1 ANIMAL DISEASES the movement of animals infected with or exposed to a communicable disease. Provisions now affect Texas fever Some animal diseases are so devastating, no individual in cattle, scabies in cattle, equine infectious anemia in farmer or rancher can protect their herds or flocks. There horses, hog cholera, tuberculosis in cattle, brucellosis in are several regulatory control groups to help stop the cattle, and screw worms. spread of disease under the supervision of federal and state organizations. Most states have state veterinarians Where certain animal diseases are involved, the stockman who direct the livestock sanitary and regulatory programs. can get financial assistance called indemnity payments through federal and state sources to help eradicate the Health requirements governing the interstate movement diseased animal. of livestock are issued by both state and federal animal health agencies. Most requirements prohibit or restrict OUO1023,0002D02 -19-24FEB11-1/1 BRANDS AND BRAND INSPECTION In the range country of the western United States, brands are used to identify the ownership of animals. This helps reduce theft (Fig. 12). To meet their needs some states have laws governing the recording and inspection of DXP01740 —UN—10SEP10 brands and the transfer of branded animals. Ranchers operating in these states should become thoroughly familiar with the provisions of the brand inspection laws. Unbranded animals are an open invitation to thieves. Without brands, strays are difficult to locate. Law enforcement officers can be of little help unless there is positive animal identification they can use. Fig. 12 — Brands help reduce theft of animals OUO1023,0002D03 -19-24FEB11-1/1 10-16 090117 PN=169  Agriculture Law LIVESTOCK POLLUTION LAWS AND REGULATIONS Both open lot and confinement livestock systems come under pollution regulations. Open lots present drainage and runoff problems (Fig. 13). Both must comply DXP01741 —UN—10SEP10 with the Concentrated Animal Feeding Operations (CAFO) regulations that are enforced by the United States Department of Agriculture and individual state departments of agriculture. Confinement systems must be coordinated with the disposal area so pollution will not be created when storage pits are emptied. Fig. 13 — Confinements and open livestock lots can Registration of facilities and a permit may be necessary cause pollution problems to operate open lots and confinement areas. These are required so the federal government and the states can monitor livestock wastes and make sure it is properly handled. Since state regulations vary, check the regulations for your state. OUO1023,0002D04 -19-24FEB11-1/1 AGRICULTURAL CHEMICAL LAWS AND control over use, distribution, and sale of pesticides. All REGULATIONS pesticides must be registered with the Environmental Protection Agency which approves or disapproves the People are concerned over the use of chemicals and pesticide for use. drugs for fear of poisoning food. The user is liable for the safe application of all drugs and chemicals Pesticides are classified as “general use” or “restricted use.” “Restricted use” pesticides may be applied only by or Chemicals and drugs must be used with discretion, under the direct supervision of a certified applicator. Many especially those designed to kill a living organism. Federal states require training and testing for certified applicators. regulations now require chemicals and drugs to: You should check your state's regulations on the use of Be carefully tested through properly designed agriculture chemicals and drugs and your liabilities when experiments before use. using them. Some are capable of killing. Your liabilities Conform to federal and state laws. could wipe you out if you ruin a water supply or fatally Be accurately labeled and state the uses for the product. injure someone. Pesticide regulation in the United States is defined by the Federal Pesticide Act of 1978. The law provides OUO1023,0002D05 -19-24FEB11-1/1 RIPARIAN RIGHTS A right is a power, privilege, demand, or claim, possessed by a particular person by virtue of law. Every legal right one person possesses imposes a corresponding legal responsibility on another. A riparian is someone who owns land bordering on a stream. A farmer or rancher DXP01742 —UN—10SEP10 who is a riparian has certain rights and responsibilities they should observe (Fig. 14). An owner of a stream bank (riparian) has the right to dam a stream or make other uses of it so long as they do not: Interfere with the use of the water by downstream owners. Fig. 14 — Riparian rights regulate the flow of water in streams and rivers Divert the course of the stream. Reduce the amount of water unreasonably. Cause water to back up on the land of those above them. OUO1023,0002D06 -19-24FEB11-1/1 10-17 090117 PN=170  Agriculture Law SURFACE WATER soil conservation and improvement. The landowner must not violate any of the common-law rules of drainage. Surface water is treated differently by the law. When it rains, surface water flows down arroyos, draws, and A common law on damming or impounding water is that gullies that are usually dry. anyone who dams or impounds water does so at their own risk. If this action later causes damage to others, they are A landowner may dam, divert, or store surface waters in liable for the damage. This rule usually applies whether irregular streams for water conservation livestock use, or the landowner dams up a stream or surface water. OUO1023,0002D07 -19-24FEB11-1/1 DRAINAGE Some states, where much of the land is too flat to A general rule for drainage is that an owner whose land adequately drain, have passed laws legalizing the naturally drains across a neighbor below may increase construction of drainage works which cross property lines. the amount of water flowing from their land by artificial This is usually accomplished through the formation of ditches constructed on their land. This can be done if the drainage districts. artificial ditches drain only the natural basin water. OUO1023,0002D08 -19-24FEB11-1/1 IRRIGATION Laws regarding irrigation (Fig. 15) vary widely among states. Some general rules include: A riparian owner is entitled to reasonable use of water DXP01743 —UN—10SEP10 for irrigation if it doesn't harm lower riparian landowners. The courts use many tests to determine how much water a riparian owner may use for irrigation purposes. In the end, each case is determined on the basis of reasonableness. You can get the right to take water by contract, license, or by a long and continuous use of the water supply. The right is not confined to flowing water, but may be Fig. 15 — Irrigation laws differ from state to state applied to water in ponds and wells. Generally only riparian land in the same watershed as the stream is entitled to water from the stream. Most states allow the formation of irrigation districts Livestock comes first. There are some small streams so land can be irrigated at a uniform rate and without that carry only enough water for normal livestock and discrimination. domestic purposes. No water can be drawn from these Many states require permits for water rights to pump streams for irrigation. water from the ground or stream. Usually records of the The right to use a stream for irrigation purposes may be amount of water pumped are kept. lost if the irrigation channels are abandoned. Irrigation water must be kept under control by the landlord or tenant. They are liable for water damages. OUO1023,0002D09 -19-24FEB11-1/1 DOMESTIC USE OF WATER Household purposes. Domestic use means the use of water for: Watering livestock. Irrigation of land no larger than two acres for growing NOTE: As a domestic user you may not be required gardens, orchards, and lawns. to get permits to appropriate water. OUO1023,0002D0A -19-24FEB11-1/1 10-18 090117 PN=171  Agriculture Law ESTATE PLANNING The objectives for developing a plan. Estate planning is a plan for financial security during Examples: To keep a farm in the family; to treat all retirement, the fair consideration of heirs, and the children equitably; to help children start farming; to reduce provisions for continuing the business. It takes into state and federal estate taxes, income taxes, and gift account the laws of wills, taxes, insurance, property, and taxes; to inform heirs what to expect so they can make trusts, and carries out a person's wishes for the disposition plans accordingly. of property at death. Lack of planning before a person dies may result in The portion of the estate required by the surviving spouse to provide a sufficient income. serious farm management, family, and legal problems when the estate is being settled. Problems might include: Plans that will work regardless of who dies first. Provisions that should be made in case the surviving Ill feelings and bitterness among heirs. spouse should remarry. Uncertainty of eventual owners. As a good business practice, retain an attorney for an Inequitable treatment of children. annual legal checkup including a review of your estate A farm being sold or split into small, uneconomical units. plan. Estate planning requires legal documents to be A widow or widower with young children not able to drawn and executed and requires all aspects of the plan provide adequately for the children under guardianship. meet specific legal requirements. FACTORS TO CONSIDER IN ESTATE PLANNING When developing an estate plan consider: OUO1023,0002D0B -19-24FEB11-1/1 10-19 090117 PN=172  Agriculture Law PROPERTY There are two general kinds of property: Real property includes land and permanent improvements such as houses on the land (Fig. 16). DXP01744 —UN—10SEP10 Personal property includes movable items. Personal property may be tangible objects such as livestock, machinery, and household goods, or intangible objects such as bank accounts, bonds, stocks, and negotiable notes. METHODS OF OWNING REAL PROPERTY There are many methods of owning real property: Fig. 16 — Real property includes land and permanent improvements Fee simple ownership gives the owner the unrestricted right to sell, mortgage, or dispose of real estate. A warranty deed generally implies that at the time of Co-ownership occurs when property is owned by two or delivering the deed: more owners with undivided interests. This method of ownership includes tenancy in common, joint tenancy, The seller owns the property free and clear of legal and tenancy by entirety. claims, such as liens and mortgages, except those Tenancy in common provides for owners with undivided claims specifically mentioned in the deed. interests with no rights of survivorship but with rights to The seller has the right to transfer the property. convey, mortgage, and otherwise care for as is available The buyer will have quiet and peaceable possession. through fee simple ownership. The seller will defend the title if anyone lawfully Joint tenancy provides for owners with undivided challenges its legality. interests and with rights of survivorship (property cannot A quit claim deed generally implies that: be conveyed by will). Such ownership does provide for conveying or mortgaging that owner's interest in the The seller is only conveying the seller's rights in the property. If conveyed outside of the joint tenancy, then property. the joint tenancy terminates. Seller does not promise he/she owns anything. Tenancy by entirety provides for owners with undivided interests and with rights of survivorship but does not If the seller has no interest in the property, none will be allow for conveyance without consent of the other party conveyed. If a buyer buys the Brooklyn Bridge, the buyer involved in the tenancy by entirety. takes a quit claim deed from the seller. The deed is good. Life estate entitles a person (life tenant) to receive The seller has no financial interest in the bridge so far as income from or use of a property for their life only. the deed is concerned; the deed gives the buyer exactly When the life tenant dies the property goes back to the what is expected: “any right, title, or interest” the seller original owner or to a remainderment. possessed in the bridge. However, the seller is probably guilty of fraud, and the buyer still doesn't own the bridge. Life estate is a little more complicated than fee simple. John Burke wants to buy some prime land for orange Quit claim deeds have a use. They are often used to clear production on the east rim of California's San Juaquin titles to property. All who have even a remote interest in Valley. However, no one will sell. All the owners are sure the property give up their interest by signing a quit claim the land value will increase. deed to one person. That person then holds the deed. If there are no other flaws in it, the buyer owns clear title. Frustrated, John visits a real estate broker and learns about a life estate plan. The broker arranges for John to TRANSFERRING LEGAL OWNERSHIP OF PROPERTY buy land from Barry Brown, an elderly landowner who plans to will his land to his son. Now that we have deeds to prove what we own, who owns it, and the method of ownership, how do we actually In the life estate plan John Burke pays Barry Brown a transfer property? price for the land and uses it as if it were his own until he dies. When Burke dies, the land reverts back to Barry There are several ways of transferring legal ownership of Brown or Barry's heirs. property from one person to another. KINDS OF DEEDS USED IN CONVEYING The most common are: LAND OWNERSHIP Wills Deeds are documents that show what real property is Laws of descent owned, who owns it, and what method of ownership they Contracts have. There are two kinds of deeds used to convey land The deed is the actual instrument of conveyance of legal ownership. ownership of property. Continued on next page OUO1023,0002D0C -19-24FEB11-1/2 10-20 090117 PN=173  Agriculture Law To sell property, a legal contract is necessary. Examples They do not become effective immediately upon the include the outright sale with mortgage, land contract, and death of the maker. reserving life estate. REASONS FOR HAVING WILLS GIFTS Here is a list of reasons why you need a will. Land may be given away by a deed that is properly They allow you to distribute assets as you wish, not as signed, acknowledged, and delivered. This is where an the laws of descent decree. attorney can help you. Personal property can be given They reduce costs and time of settling the estate. away by handing over the property with the apparent You can name your own executor/executrix of the will intention of making the recipient the present owner. to save time and money. Combined sale and gift You can name a guardian for minor children. (This provides someone you trust and like to care for your Co-ownership minor children.) Examples include tenancy-in-common, joint tenancy, You can establish trust funds. A trust fund is established tenancy by the entirety, partnership, and cooperative. in a will to ensure the security of the beneficiaries. The money or property is left to an institution or person who WILLS administers the property or money in accordance to the A will is a legal statement of a person's wishes concerning instructions in the will. the disposal of property after death. Correct wills are not The family can avoid internal conflict among its difficult to make. Bad wills are nearly always the result of members. hasty preparation, obscure language, and failure to regard CONSEQUENCES OF DYING WITHOUT A WILL the fairly simple requirements of the law. Often the person tries to cover too many possible events and situations. Every state has laws governing the estates of deceased persons. These are called the laws of descent and The only type of will recommended for estate planning is distribution. If you fail to provide a will, the state will a formally executed will drawn by an attorney. The law distribute your property according to this law. The law of recognizes other types of wills, but these other types are descent is very complex. It would definitely be necessary best used only in an emergency. for you to consult a lawyer before assuming the law would FACTS ABOUT WILLS carry out your wishes. A will must first be proven official and admitted to the Other consequences of dying without a will include: courts. Because of this, those wishes which need to be There will be a court appointed administrator/admin- carried out immediately upon the death of the maker istratrix of your estate. This might be someone you of the will should be left out and entrusted to a friend or distrust. The administrator/administratrix will probably relative. This person may be the executor/executrix of demand a fee. your will if you choose. There will be a court appointed guardian for your minor Other facts about wills include: children. This could be someone you like, or someone you dislike. They have no force or effect until the maker dies. It will cost more to settle your estate. Your family may They must control only the property individually owned receive less. by the maker of the will. OUO1023,0002D0C -19-24FEB11-2/2 ESTATE TAXES estate taxes in addition to the federal tax. Because estate tax laws are very complex, it is recommended that you Estate taxes are a tax on the right of an owner of property consult an attorney familiar with estate planning and to transfer property to others at death. The federal estate taxes as you plan your estate transfer. government has a “unified transfer tax” which taxes the transfer of property by gift or death. Most states impose OUO1023,0002D0D -19-24FEB11-1/1 10-21 090117 PN=174  Agriculture Law RETIREMENT including employees who are also shareholders (such as a closely held farm corporation). No estate plan is complete without provisions for Annuity. These are a yearly payment from an invested retirement. Few of us will be able to work all of our lives. sum for life or for a specified period of time to guarantee We need to have a source of income when we retire. annual income. There are several ways to build a retirement income. The Trusts. These are a written agreement stating that an best plan is to have several sources of retirement income. owner of property transfers title to a trustee for the Here are a few sources of retirement income to choose benefit of beneficiaries. from: Life insurance. Investment-type life insurance will insure certain amounts payable during the life of the Savings. policy. At some point in time you also may receive an Employer-sponsored pension plans (examples: teacher annuity, lump sum, or loan from the policy. retirement, company profit-sharing). Social Security. Tax sheltered retirement plans: Continuing to operate the farm. - Individual Retirement Accounts (IRA). These may be Rental or lease of farm property. established by an individual even though other plans Sale of the farm. are in effect. An extra contribution may be made for a United States Savings Bonds. nonworking spouse. Commercial stocks and bonds. - Keogh Plan (HR-10). These may be established by United States Treasury Bills. self-employed people such as farmers or ranchers for Nonfarm investments. benefit of themselves and their employees. Certificates of Deposit. - Simplified Employee Pension Plan (SEP). These School bonds. may be established by an employer to make annual Municipal bonds. payments to an employee's or partner's IRA. - Qualified Retirement Plan (QRP). These may be established by a corporation for benefit of employees, OUO1023,0002D0E -19-24FEB11-1/1 CONCLUSION Find a competent attorney and make him/her one of your The farm and ranch manager must know the laws that team. You must become aware of the laws and regulations govern their business. that affect your agricultural activities. You must use them to make more realistic day-to-day decisions in your farm or There are volumes of laws applying to agriculture. ranch business. Remember, when you have questions or We have only scratched the surface in this chapter. uncertainties about business deals, consult a competent Remember, the purpose of this chapter is to familiarize attorney familiar with agricultural laws and regulations. you with some of the normal business transactions involving farmers and ranchers, and to make you aware of some dangers and opportunities in the law. OUO1023,0002D0F -19-24FEB11-1/1 10-22 090117 PN=175