It is Never Too Early For a Farmer to Begin Their Estate Plan.
I recently had the pleasure of meeting with a proactive farm couple who is putting together their estate plan relatively early in life. They have a young son who is interested in taking over the farming operation someday. The parents would like to give him that opportunity, but they realize it may be at least 10 to 15 years before he will be ready to run a farming operation. They want their plan to be able to preserve their farm in case something should happen to them in the meantime. They are also taking into consideration that their other children do not wish to farm and that a lot can change over time. To do that, they sought out an attorney who is a farm estate planning specialist. Together, they have been seeking assistance from other experts such as a trust officer about how to administer the estate, and from Halderman about how to manage the farm until their son is ready.
This example illustrates that it is never too early to begin thinking about estate planning, especially if you farm or own a business. Everyone needs to plan for what will happen after their death or potential incapacitation. Otherwise, the state, tax consequences, litigation attorneys, or creditors may determine what happens to your assets and your life’s work instead of you. My wife and I recently went through estate planning ourselves. It’s not the most exciting or fun process, but it is certainly a necessary one that will leave you with peace of mind when you have finished. I highly recommend finding a well-qualified, specialized attorney who can guide you through all the considerations. Farmers should seek one who is very experienced at working with farmers.
A good place to begin is to consider your business and all your assets and where you would like them to go, and under what circumstances. You may have multiple heirs with not all of them involved in the farm business. Those working with you have probably helped build your business and your net worth and shared the risks with you. They may deserve equitable treatment, but not necessarily equal treatment if they are not involved in the business.
However you provide for your heirs in your plan, you will need to provide them with a clear-cut way to settle the estate. Consider a plan that divides the assets for them, rather than one that makes them figure out how to do it later. Nothing can break up a good family more than leaving them joint ownership of assets. More often than not, they will have different goals and needs. Why place them into a forced partnership that can cause disagreements about how to divide assets or turn them into potentially unwilling partners? One may be forced into taking on extra debt to buy out another. Others may find themselves trapped in owning land and other property when they would rather sell it and use the cash in another way. Your plan should seek to avoid that.
It’s also important to realize that your business, your financial position, and your family situation may change over time. Your heirs may have different needs, capabilities, experience, and maturity levels. Those can change over time as well. To make sure your estate plan still fits your needs and desires, you will need to periodically revisit it and consider amending it as circumstances change. A good plan considers all of this and communicates it to everyone.