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Looking for financing ideas to purchase family farm

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I am living on the family farm, and am the fifth generation here. My parents had always said whoever stayed to care for the land would inherit it solely. now that everyone is aging and I am pushing to take over legitimately my dad has changed his mind indicating that my sibling would need to be compensated for "her half". I had not planned for this and am caught a bit off guard. additionally my dad does not want to put anything concrete in his will, he wants us to "figure it out" after he is gone.......that never works well. my mate and I have become more and more responsible for the happenings on the farm in general and since my mother's death have increased our familial obligations to my father as well. in the interest of making sure my family does not come to blows and that the land continues to have a good steward I am wanting to secure the property now. Ideally I would just have enough cash in the bank to give him full market value and be done with it, but of course I don't. he will also want to continue to live on the land and moonlight until he has passed. I was hoping someone out there might have some creative ideas for financing that would be fair and ultimately legally binding.

Any advice is much appreciated.

Posts: 180
Location: Washington Timber Country
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If the property is eligible for a standard mortgage, my suggestion would be to try to come to an agreement with Dad and your sibling about what "fair" looks like. Dad can then give you a "gift of equity" equal to whatever your fair share of the farm's value is. What that means is, you would buy the house from him for market price, but the amount you actually owed would be offset by the gift of equity. It basically acts like a down payment for you.

As an example, using made up numbers: If the farm is worth $400,000 and you all agree that it should be split 50/50 between you and your sibling, Dad would agree to sell it to you for $400,000 with a $200,000 gift of equity. Your mortgage calculations will all be based on a $400,000 purchase price with $200,000 down (the equity gift) so your loan to value ratio is at 50% meaning that you get the best available rates, no mortgage insurance, and the overall risk is lowered making it easier to be approved. At closing, Dad will get a check for $200,000 (minus any taxes, fees, etc.) which he can give to sibling. Then the house bit is done, and when he passes you can take on the task of dividing the rest of the assets in whatever way makes sense.

I do mortgages for a living, and have helped clients with several similar situations over the years. Let me know if there are other questions I might be able to answer.
Posts: 2965
Location: Upstate NY, zone 5
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If you have really been putting in significantly more work and investment in keeping up the farm, I think it would be fair for that investment to be figured into the final deal. I would not push a specific figure, but making sure both your dad and sibling agree that your work has added or maintained some value to the farm ought to help them be more flexible than saying you each get exactly 50%. The devil is in the details, and it is up to you how much you want to assert the value of your investment relative to the whole.

My father left a handwritten will which could not be validated because one of the witnesses had moved away and could not be found; he specified that I (living on part of the family land) should get the rest of it while my sisters and I split the balance of the assets. After the lawyer/officials were done pushing a standard "intestate" settlement, I had to "buy" the land with my share of the other assets. And this was with no arguments or hard feelings on anyone's part. Imagine if they had been greedy!
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