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Will your children’s marriages affect your family farm?

On Behalf of | Sep 21, 2021 | Estate Planning |

Whether you bought your acreage yourself or inherited it as a third-generation farmer, your farmland property represents your family’s financial future and its heritage. You have likely invested substantially in the maintenance and improvement of your farmland and have probably raised your children to love the land in the same way that you do.

Having your children live and work on the same farm can be a wonderful experience, but it can also lead to certain legal complications. For example, if your child gets married, the fact that they live and work on the family farm might put everybody’s interest in the property at risk.

Did you know that there’s an estate planning tool that could help you protect your farm from family law risks, like the future divorce of your children?

Moving your farmland into a trust will protect it for future generations

If your spouse files for divorce, they would be able to make a claim against the value of the farm if the property is in both of your names or even if it is just in your name. The same might be true of any of your children’s spouses, especially if they live on a building on the farm and work with the expectation of inheriting the land someday.

An ex-spouse’s claims could lead to refinancing the farm and the loss of thousands of dollars of equity. Perhaps the most common tactic employed to avoid such losses is the transfer of farmland into a trust. When a trust owns the land rather than individuals, it will be harder for creditors or former spouses to make a claim against the farm in courts.

Moving the farmland into a trust could also potentially prevent your heirs from selling the land off for personal profit rather than continuing to live and work on the land.

Estate planning protects you and your loved ones

Being able to put certain rules in place regarding the use of the lands might make you feel more comfortable about leaving the property to family members when you die. Protecting your family’s interest in the property will also make you feel more comfortable about adding more in-laws to your extended family group.

Estate planning with an eye toward the preservation of your assets and the protection of your family’s farm could also help you avoid taxation and creditor claims against the property later. Holding your farmland in a trust will often help protect you now and your loved ones in the future. Learning more about trusts can help you decide what steps are necessary for your family’s farm.