Farmers may need to think more about estate planning than others do. They often own large tracts of land, run small businesses and need to divide assets between children who work both on and off the farm.
This means that farmers-more than most people-may benefit from estate plans that go beyond a simple will.
Finding the right tool for the job
As we said in an earlier post, treating your heirs fairly doesn’t always mean dividing your assets equally. The best way to divide things fairly is to plan the division yourself. Most people think this means writing a will, but there are other tools. These other tools may give you more control, help your heirs avoid probate and reduce everyone’s tax burden. Some of these options include:
Establishing a business structure with a formalized succession plan: If you register your farm as a business such as an LLC or LLP, you can transfer it to your partners or co-owners according to the succession guidelines you create. This offers several advantages, including the chance for your partner or partners to get their “skin in the game” before you retire.
Putting some or your entire farm into a revocable trust: A revocable trust is another tool that allows you to manage and transfer property without having it go through probate. When you set up a revocable trust, you can transfer assets into the trust such as your farm. You can continue to claim income from the trust until you pass it to your beneficiaries, who get to avoid probate.
These are just a few of the options available. The main point is to recognize that your estate planning can involve more than just a will.
The sooner you start, the more flexible you can be.
An experienced attorney can help you clarify your estate planning goals and find the tools to best help you meet those goals.