Prepare Your Farm Estate For The Next Generation
Create a succession plan for your family farm.
Farm estate planning is extremely important. If you want keep your land, livestock, crops, and business in the family, establishing an air-tight will is crucial. Let us help you make sure your will is air-tight so your family doesn't lose what you've worked so hard to create and preserve for them.
We can help you divide assets efficiently to save you money on after-death taxes as well. You may want to spend some of your assets, start gifting some assets to family now, or create a trust. Let's create the best possible game plan for your family!
Keep Your Legacy In The Family
Get your farm and assets to the right people, and save on after-death taxes.
Who This Service is For
Farm families must not only determine how to sustain farm operations in later generations but also how to divide the estate equitably among children. This gets particularly tricky when some kids are working the farm and others are not. We can help.
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Farm families have the same issues as other professions and need estate planning in much the same way. Families would like to avoid selling the farm to pay costs of a nursing home for a few years, as much as any business would rather not sell either. Avoiding estate taxes is also a main concern.
One of the biggest concerns for estate planning in a farming family is handing down the assets, especially when some family members no longer stay on the farm. How can a family pass down the farming business (land and equipment) without neglecting non-farming family members? Compromises are possible. Three of the most common options include:
The heir could purchase the farm from the parents at their retirement. Then proceeds from the purchase could be divided among the heirs. However, there are difficulties with this solution. The value of what is passed along could be reduced because of recapture taxes and capital gains. The heir must also have access to large amounts of money or go into debt to complete the purchase.
Instead, the heir could make the purchase of the farm after the death of the parents. This would provide access to estate planning rules to eliminate capital gains tax. However, the price of the farm may have increased over time. The price could, however, be set at a predetermined discount ahead of time in an estate plan. Parents can also establish a mechanism to credit the heir with sweat equity.
Parents can also split the farm equally, or give each heir undivided interest in the pieces of the property. The farming heir could have the right to rent the property from the other heirs for his/her lifetime or other specified time period. Being specific in the estate plan about rental rates is crucial in a plan like this one. It could be tied to "average" for the county or a percentage in relation to that average rate. The more specific, the less ambiguity and less opportunity for arguments or confusion for the family.
The biggest difference farming families have from other estate planning is their emotional tie to the land. Selling it is not as common as in other businesses because of the emotional ties. Thus, "transition" is heard more often than "exit plan" in farming family planning.