Like any other business owner, farmers need to carefully plan how the farm will be passed on to heirs. However, farmers do have some unique estate planning issues to consider.
In the eyes of the law, a farm is just a type of business. Like any other business, it can be passed to other people when the current owner passes away. However, estate planning for farms often has issues that are not as much of a concern for other types of businesses. Most farms have a lot of valuable assets, such as land and equipment, which could add up to an estate tax liability. However, farms often do not have the liquid assets to easily pay those taxes. Ohio’s County Journal and Ohio Ag Net recently discussed some ways to plan for this problem in “Estate planning for farmers: Providing for liquidity concerns,” including:
- Develop a plan to build up liquid assets that can be made available to the estate after the farmer passes away. This can be as simple as investing farm income in securities.
- Life insurance can be purchased to provide cash to beneficiaries.
- If the farm is held in partnership or as a corporation, then creating buy-sell agreements with other owners to purchase an individual’s ownership stake upon death can provide money for the deceased’s estate.
- The likelihood of the farm estate having to pay the estate tax can be reduced during the farmer’s life in several different ways, including creating a gifting plan with the help of an attorney and selling off older equipment that is no longer needed.
An experienced estate planning attorney can help you to create a plan specific for your farm.
Reference: Ohio’s County Journal and Ohio Ag Net (July 19, 2016) “Estate planning for farmers: Providing for liquidity concerns”
In the past few years, many services have sprung up that offer to help people create their own estate plans—such as by offering them downloadable forms. These services are often inexpensive but also risky.
You can find a lot of advice on the Internet that will tell you that estate planning really is not that complicated. In a sense, that advice is correct. The core of estate planning can be very simple. However, that advice makes it too easy to be deceived into thinking that you can create your estate plan on your own without the help of a professional. What an individual client has to do to create an estate plan can be—and often is—simple, but that is only because experienced estate planning attorneys do most of the complicated work. Recently, the Northwest Indiana Business Quarterly discussed the problems of creating an estate plan on your own in “Dangers of DIY Estate Planning.”
The article discusses many potential pitfalls of creating your own estate plan, but they all essentially boil down to the simple proposition that if you do not have professional expertise in estate planning, then you are likely to make mistakes that could cost you and your family. These mistakes can range from very simple oversights, such as not knowing how many witnesses are needed to make a will effective, to very complex mistakes, such as failing to properly understand how your estate planning choices effect the taxation of your assets after you pass away.
It actually does not matter very much whether the mistake you make is simple or complex because dealing with the mistake will almost always cost your estate more money than you saved by creating your own estate plan.
Do not risk these mistakes. Meet with an experienced estate planning attorney to discuss your needs.
Reference: Northwest Indiana Business Quarterly (July 25, 2016) “Dangers of DIY Estate Planning”