To many people, estate planning seems like an activity that is reserved for the rich. While those with significant assets certainly need a strong estate plan, the protections provided by estate planning tools can benefit everyone, including farmers. If you own and operate a farm, then you might feel like putting off estate planning or simply letting your assets be distributed as they will once you pass. But this thinking can put your assets and your legacy at risk.
If you want to avoid this, then you need to be diligent in your estate planning while taking a holistic approach. So, before shrugging off the need for estate planning, consider the matters discussed below.
What if you become incapacitated?
No one likes to think about death, but incapacitation isn’t much better. Yet, it’s a very real possibility that can have enormous implications for your farm. Without proper planning, your operations and your assets may be controlled by someone you never wanted to control them in the first place. The same holds true for your medical care. Therefore, your estate plan should include a power of attorney and a healthcare directive that name an individual who can make important decisions for you in the event of incapacitation.
Recognize the difference between land and operations
In many businesses, the operations itself carries most, if not all, of the value. But with a farm, the land is oftentimes more valuable. So, you’ll need to make sure that you have an estate plan in place that clearly dictates who receives the land and who is to take on operations. Leaving everything to your children equally might seem like the best route, but it might cause confusion and conflict. This is especially true when one or multiple heirs live on the farm while other heirs don’t. Do the heirs who are living on the farm need to pay rent to those who don’t live on the farm? Will those who don’t live on the farm be entitled to a percentage of operational income even though they’re not the ones putting in the work? These are important matters that you’ll have to consider and address appropriately in your estate plan.
Know the true value of your estate
Farmers are usually humble people. This often causes them to undervalue their equipment, land and other assets. This can put you at a disadvantage when it comes to figuring out how you want your estate distributed. So, have an accurate assessment of your equipment’s depreciation and the fair market value of your land before moving forward.
Legal professionals who understand the farming business
These are just a few of the issues that farmers face when dealing with estate planning. The process might seem complicated, but it doesn’t have to be. And you don’t have to face it alone. So, if you think you could benefit from assistance developing a plan that works for you, your loved ones, your farm and your legacy, then it might be time to discuss your circumstances with an attorney of your choosing.