Many farmers believe that their profession is in their blood. They may have grown up on a farm or may have lived their whole life with a strong attraction to working outside. Whether you engage in crop production or animal husbandry, the farm where you work is likely very close to your heart.
You may have inherited it from family members or bought it from your mentor. It’s also possible that you may have saved for years to purchase the land and develop your farm from completely unimproved property. However you acquired it, you likely want to protect it for generations to come.
If you haven’t started estate planning yet or just have a basic will, your farmland could be more vulnerable than you realize.
Your will doesn’t have total control over the distribution of your property
If you have a basic last will and nothing else, you may feel like you have already protected yourself and your property in the event of your death. However, a will really only gives instructions about how to distribute your property or who will assume certain roles on your behalf in the event of your death.
The person you name as the administrator of your estate may not have the opportunity to follow your instructions regarding your farmland if you die with debts. A few years in a nursing home could lead to hundreds of thousands of dollars in debt owed either to the facility or to Medicaid. Medicaid estate recovery or individual creditors can bring claims against your estate that could require the sale of your family land for repayment.
Unless you ask to protect your farmland from such explain, your farm may not pass down to the next generation the way that you hope.
Many agricultural professionals hold their property in trusts
Transferring ownership of agricultural land to a trust rather than holding it in your own name has numerous benefits. It means that your land won’t pass through probate court after your death. It also makes it harder for creditors to take action against the property. Finally, it might eliminate the risk of state taxes if you own enough land to put your estate at risk.
Careful estate planning now will protect the farmland that you love and hope to pass on to loved ones.