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Farm Estate and Succession Planning

RSS By: Andrew Zenk

This blog focuses on making complex and difficult topics in estate and business planning understandable and applicable to the reader.

Andy is an Agribusiness Consultant for AgCountry Farm Credit Services, Fargo N.D., a farmer owned cooperative and part of the Farm Credit System serving eastern North Dakota and northwest and west central Minnesota.

Overcoming the Barriers in Completing an Estate Plan

May 26, 2011

Usually, when helping people with estate planning, the most glaring problem I see involves that which is not done. Most people realize the importance of estate planning, but yet, no plan is in place. Why? The fact is, there are many barriers in the way and people simply do not know how to overcome them. Common barriers include an unawareness of the options available with estate planning, and how to know what would work best. People often struggle to find someone to trust that will have their best interests in mind, not a product to sell. Another barrier involves the problem of simply not knowing where or how to start. Or, a barrier might involve a problem of how they want their assets distributed at death. For example, to ensure that a family farm can remain viable, there might be a need for a fair (and not necessarily equal) distribution of assets among farming children and non-farming children. When faced with this reality, people are often unsure and uneasy on how to do that. Finally, a common barrier involves the fact that no one wants to deal with the psychological difficulties in having to face their own mortality. While no one likes to think about this, it’s unavoidable.

 
Along with these barriers, many people display further feelings of hopelessness, thinking they are the only people in the world with these problems. At that point, I look them right in the eye and say "YOU ARE NOT ALONE!" In fact, most everyone faces one or more barriers in their estate planning. Accordingly, the starting point in completing an estate plan is realizing that these barriers exist and make the commitment to yourself and your family to get help and overcome them.
 
It is so important to knock down these barriers and complete your estate plans. Aside from how your assets are distributed upon your death, there are many reasons why it is crucial to complete an estate plan.
 
-         Prevent Against Paying Unnecessary Estate Taxes
 
o       In developing an estate plan, consideration must be given to the tax consequences of the plan. This is important so that the assets available to your family members can be maximized, and taxes minimized at death. This is especially important in farm families, as land values continue to rise substantially.
 
-         Farm / Business Transition
 
o       You may be passing on the farm to a farming child. You could have the best transition plan in place that is working exactly as it needs to. However, ignoring the estate planning component of this plan would likely bring your family into a situation that will lead to the failure of the farming operation that you and your loved ones have spent years building up. Accordingly, you must ensure your estate plan is compatible with your farm transition plan and must consider several factors to ensure the continued viability of your farm.
 
-         Appointing Guardians for Minor Children
 
o       A will allows for parents to appoint guardians to care for their minor children, should they both pass away. In the absence of a designated guardian under a will, the court must determine who will be guardian of the person and property of a minor child. The person chosen by the court may be the last person you would choose to raise your child. 
 
-         Your Opportunity to Make a Unique Estate Plan that Fits Your Goals
 
o       If you die without a will ("intestate"), your state's laws determine how your property is distributed.  The problem herein lies that what your legislators in congress determined as to who should get your property may be completely at odds with your current life situation. By planning your estate, you have the opportunity to make a plan that fits your goals. 
 
o       Additionally, you may have completed a will decades ago and it was exactly what you needed at that time. However, are you sure that it still meets your needs? Chances are that it does not. The reality is, family’s change, finances change, laws change, and personal goals change. Estate plans need to change accordingly.
 
OK, so where do you start? I suggest that you find a professional that you can trust has your best interests in mind. As an Agribusiness Consultant, my job is to help producers identify their estate planning needs and help them figure out the best way to achieve those goals. I have nothing to sell them or products to push. I simply help them figure out where to start, what their estate plan should look like, and what it takes to be completed. From there, I help them get the documents completed with their attorney and make sure that it fits with their overall farm transition/retirement plan. 
 
This service provides the peace of mind that the estate planning documents are completed and that they work best for the family. 
 
The best part about my position is seeing the faces of people turn from frustration, hopelessness and despair to that of happiness and peace of mind. I cannot get enough of that and hope you experience it for yourself. I encourage you to knock down those barriers and get that estate plan completed.

 

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Disclaimer: The information contained in this publication provides a general overview on various topics and is strictly for informational purposes only. The reader should consult a qualified professional for advice based on his/her specific circumstances. AgCountry Farm Credit Services and the writer of this blog make no representations as to the accuracy or completeness of any information on this site or found by following any link on this site, and shall not be liable for any errors or omissions herein or for any losses or damages resulting from the display or use of this information. 
 
Required Disclosure Pursuant to IRS Circular 230: Pursuant to requirements imposed by the Internal Revenue Service, any tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (1) avoiding penalties under the Internal Revenue Code; or (2) promoting, marketing or recommending to another party any transaction or matter addressed in this communication.
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