The major causes can all be avoided with smart estate planning
You’ve heard the horror stories. The ones about farm families who spend months in court fighting over assets. The result? A destroyed business and fractured family.
Why does this situation play out over and over? After studying numerous family farm cases Kitt Tovar Jensen, staff attorney at Iowa State University’s Center for Agricultural Law and Taxation, points to three key reasons:
- Disappointed beneficiaries. Heirs are surprised by what they find in their family’s will. Often assets were divided differently than they expected or unspoken agreements were not followed.
- A failure to plan. This can include not having a plan at all or not finding the correct professionals to guide you to create the best plan for your farm and family.
- Life events. People often don’t account for big live events, such as marriage, divorce, births, disability, death or disagreements.
By knowing these common hurdles, you can plan to avoid them. “Don’t wait to make or update plans,” Jensen says. “You and your family need to engage in family discussions before it’s too late.”
For instance, Jensen suggests updating your will when life circumstances or goals change. Then tell your family members about your desires – ideally at a family meeting.
“If you adjust your will due to new goals, write your reasoning for the changes in the updated will,” she says.
Also, be mindful of the beneficiary designations in your estate planning documents and assets. The language and defaults for these can vary by state.
“The No. 1 mistake is not naming a beneficiary,” Jensen says. “Check yearly to ensure beneficiary designations are up to date. Also, make sure everyone’s name is spelled correctly.”
Above all, Jensen says communication is vital in avoiding litigation. If this is difficult in your family, consider working with a trained mediator or other professionals.
“The investment of good counsel is minimal compared to the cost of mistakes,” she says. “This is not the place to cut corners.”
Ready to start your plan? Learn what “not dead yet documents” you should have in place now.
