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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.

"Per Stirpes" Distribution in Estate Planning

Sep 02, 2011

 

Many of you may have heard the term “per stirpes” stated, either reading it in your estate planning documents, or hearing it at a law office, etc. This is a legal “term of art” (usual language) that deals with how your assets would be distributed, should one of your children pre-decease you. Per stirpes distribution means this instance would be handled by a provision in your estate planning documents that says if a child pre-deceases you, his or her share would be split equally among his or her kids. If he or she has no surviving children, then that share could be distributed to your other surviving children, or another option that you choose. 
 
Aside from who inherits your assets should one or more of your children pre-decease you, we discussed how this person(s) would inherit the assets. If a beneficiary is a minor, he or she would not be able to inherit individually outright. However, if they are the age of majority (18), they legally could individually inherit and own the property outright. However, if you gave an 18 year old a great sum of assets / dollars outright, this could be dangerous. Many times 18 year olds do not have the maturity to handle a sum of that size. Accordingly, many estate plans include a trust to protect the inheritance and have it available to the beneficiary, but only for certain things (health, education, maintenance and support). Then, at an age where you believe they are mature enough to handle it (25-30, usually), you can direct that the trust be cancelled and the beneficiary receives it outright.
 
This is something to discuss with your attorney, and come to your own conclusions on what works best for you. 

 

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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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