Estate planning can be just as important as working the land when it comes to keeping your farm.
You are a farmer.
You work hard every day.
You know there are factors you cannot predict or control.
In fact, there are really very few of them.
Hail may destroy your crops.
Disease may wreak havoc on your livestock.
According to a recent Modern Farmer article titled “Agronomics: Estate Planning,” like the weather, you cannot predict when you will die or if you will become incapacitated.
First, start talking with your family about who will take over management of the family farm when you can no longer do so yourself.
You will also need to set up a legal plan for the succession of your business and the division of your assets.
What are ways to do this?
Limited Liability Companies (LLCs)
You could create two.
One would cover the land.
The other will cover the business, equipment and animals.
What will this do?
It will allow the assets to be converted to shares to make it simpler to transfer ownership to your children.
Leasing the acreage to the business could also provide you with retirement income.
Annual gift exclusion
If you are planning to give shares, you could start now.
You can give up to $14,000 annually ($15,000 starting in 2018) to each individual.
A land trust will pay you for the an easement.
This would restrict development.
Why would this be helpful?
It would decrease the assessed value of the property and still allow for it to be farmed.
Some of these strategies may be good for you.
Some may not.
Work with an experienced estate planning attorney who has ag experience to create a plan specific to your needs.
Remember: “An ounce of prevention is worth a pound of cure.” When making your financial, tax and estate plans, do not go it alone. Be sure to engage competent professional counsel.
For more information about estate planning in Overland Park, KS (and throughout the rest of Kansas and Missouri), visit our estate planning website and be sure to subscribe to our complimentary estate planning e-newsletter while you are there.
Reference: Modern Farmer (October 20, 2017) “Agronomics: Estate Planning”