Anyone with valuable property may need to create an estate plan. Both real estate holdings and small businesses give people an incentive to draft wills and other estate planning documents. Farmers have assets that may fall into both categories simultaneously. Farmland is real property, but it may also be an important business asset.
Farmers engaged in estate planning face many of the same challenges as the average person but also several unique considerations. For example, the following issues are likely to complicate estate planning for farmers.
Preserving farmland
Those who have worked the land for years may be the third or fourth generation of their family to do so. Farmers often feel very strongly about preserving a family’s agricultural heritage. Farmland can be vulnerable to creditor claims when people age, Medicaid recovery efforts after they die and spousal property claims during divorces. Often, farmers need to revisit how they hold real property to better protect it. Moving farmland into a trust is a common estate planning strategy used by those who want to preserve their real property for generations to come.
Arranging for farm management
Those who operate a business need to prepare for the possibility that someone else may need to take over their job with very little advance notice. A succession plan provides instructions about how someone’s replacement can take over their role at a company. Farmers may need to provide very clear instructions about both day-to-day operations and long-term financial obligations for the farm. A succession plan can help ensure that a child, spouse or other family member could quickly and effectively take over farm operations when someone suddenly becomes incapable of running the agricultural enterprise on their own.
Planning for family inheritances
Children and other family members sometimes have unrealistic inheritance expectations when they come from agricultural families. They might anticipate inheriting the land and being able to do what they want with the property in the future. Parents often need to plan very carefully to allocate assets for children while simultaneously protecting the family farm. Not only do parents often need to include very clear instructions for the distribution of their property among their children after their passing, but they also likely need to talk about those choices with their family members so that disappointed adult children do not try to litigate and contest their estate plans.
Farmers have numerous unique challenges that can affect their estate planning needs, and they may need assistance evaluating the best solutions for their unique desires, accordingly. Farmers who take the time to draft comprehensive estate plans can protect their farmlands and continue their family legacy without disrupting the relationships among their loved ones.
