Planning for the future of the Farm
Thinking about and executing estate planning is no easy task but it can be even more complex and emotional for farmers. The farm is a business, real property and personal property all mixed together and many situations arise whereby the farmer needs to decide how to distribute these assets between farming and non farming children.
The estate plan is a tool to prevent or minimize conflict and the earlier the process starts the better. While estate planning makes people face their mortality it should be looked at as planning and treating heirs fairly and effectuating a smooth transfer of assets.
Planning for the transfer of any large asset, especially a farm, is very important. Failure to plan may result in the application of state statutes for distribution of property and contentious litigation in a probate proceeding. Planning allows for a fair solution but remember fair does not always mean equal.
Every situation is different. Some families have children who are involved in the farm in great depth, others where no children are involved and some where it is a mix of involved and non involved children. If you fail to plan and the assets have to pass through intestate succession (via state law) there is no effect given to farm working children, children with debts and creditors, children with potential drug or alcohol issues, or family law matters. The laws don’t know who went to college and became a engineer, who helped plow the fields, or who is now a pharmacist. The only way to plan a fair succession is with proper planning.
The fair versus equal decision is always a difficult process. It is best to discuss the plan with all the parties involved so its known what is going to happen well in advance and any discussion so perceived slights can be discussed. Fostering ill feelings can be troublesome. By laying out the plans in advance you may become aware that your children had ideas of the future that you were unaware of and may change what you believed the plan to be.
Most people think of estate planning as drafting a will, but there are a lot of things a will can’t do. Instead, your estate plan might involve different tools. You might even realize there are steps you can take now to prepare for the future. There are several tools at your disposal and it is always a good idea to consult an experienced estate planning attorney who can help guide you through the process.
The following link has some additional information that may be helpful in introducing the process of transition planning: https://www.fbfs.com/learning-center/what-you-need-to-know-about-farm-succession-planning
Please follow us on Facebook at https://www.facebook.com/DeMakisLawPllc/ for updates and reminders.
