Love that farm. Pass it on
“We worked hard to pay for and build up the farm to what it’s worth today. We couldn’t have done it without the help of our son (or daughter). As we do our estate planning, how can we be fair to all of our children?”
So begins the conversation these days between farm couple and professional advisor. While some may think of estate planning as merely estate tax planning, taxes are just one issue. The most difficult and important matters can have little to do with taxes. Creating and carrying out plans that will assure fair—while not necessarily equal—treatment of your loved ones is such a matter.
Fairness Is Essential
Taking responsibility for this fairness issue is critical to the long-term health of your family and your legacy. Fail in this regard, and there might never again be a complete family reunion. Stick your head in the sand and you can count on the family farm becoming part of the holdings of the highest-bidding neighbor.
We have to face the facts: our society has changed. Children used to stay in the area, marry neighbors, and continue the family farming traditions. Daughters became farm wives and sons became farmers. Now families have at most one or two children still in the farming operation. The others have moved on and away to different careers. The child who is heavily invested—in time, energy, and dedication—may very well depend on this farm for a livelihood. To some degree he or she has earned the “right” to keep it, considering that the others have moved on to often more lucrative careers and less risky futures.
Despite the changes in society, however, our core values remain unchanged. We want to treat our children fairly. Farming is “in our blood” and we want to see it—this farm—go on. We want to know that someone in the next generation who shares our love of farming will carry on the tradition.
You Must Take Responsibility
The hopeful but naive person says, “I just can’t figure it out for them. My kids all get along, they’ll be fair with each other. They’ll divide the property agreeably.” Don’t do that to your kids! Johann Kaspar Lavater provided timeless wisdom when he wrote: “Say not you know another entirely, till you have divided an inheritance with him.” The wonderful kids today will become competitors, easily persuaded—by their spouses?—that they are entitled to their full-value, equal share.
A friend told me recently after suffering through an ugly family farm estate settlement that his parents would have done much better planning and it wouldn’t have been so stressful to them if they had started when they were younger. They waited to do serious planning until around age 80, and the plan did not work as they had intended.
It could have, and yours can if you start soon, look with experienced professionals for carefully tailored solutions, and then follow through. Focus on the results you want to see; let the attorney worry about what legal papers—wills, trusts, buy-sell agreements, partnerships, etc.—will be needed.
Where To Begin
If you commit yourself to a proactive planning process, it is possible to achieve fair results that the family will understand and accept. In this extraordinarily complex arena you will need professional counsel.
It’s easy to find attorneys who say they “do estate planning”—but much harder to find one who knows farming and will help you develop and implement the solutions that will fit your unique goals for your family. To see if an attorney can help design a plan to fit your particular circumstances, ask some questions:
- What percentage of your business is devoted to estate planning for farmers?
- Have you seen those plans play out completely and work well?
- How will you assure that my plan stays current with the law?
If you begin now to ask the right questions, you will be able to develop the right plan for your family and assure that what you have goes to whom you want, when you want, and the way you want, transferring your traditions—not just your net worth.
- - - - - - - - - - - - -
©2005, revised 2014, Curt W. Ferguson, all rights reserved. The first version of this article appeared in the December 2005 issue of the Prairie Farmer® magazine.