Who Gets What? Take This Important Estate Planning Step
You’ve heard the horror stories. Grandchildren in tears as they watch family farmland be auctioned off because their grandparents needed to liquify assets to satisfy the taxes. Or siblings who were once in business together now don’t talk to each other after one felt slighted because they didn’t receive the family’s antique tractor.
Succession and estate planning is difficult and time-consuming, but it is also a key step for a business that can grow into the future.
Regardless of where you are in the process, you can always take another step. Rex Brod, market president for U.S. Bank has worked with farmers as an ag lender for about four decades in the four-state area of Missouri, Kansas, Nebraska and Iowa. He always encourages farmers to take this step first.
Listen to Rex Broad discuss long-term estate planning with Andrew McCrea on the Farming the Countryside Podcast:
“First and foremost is to decide what am I going to do with my assets? Each farmer operating today needs to be thinking about what happens if I drop off the face of the earth tomorrow,” Brod says. “What's going to happen to my spouse or my children? Who will manage the operation?”
The asset part is important, as you can assign heirs to each or a plan to sell them. Then from a management perspective, reflect on the wishes of your potential heirs.
“Oftentimes children who grew up on the farm no longer have an interest in it,” Brod says. “They're successful in business in the city or they just don't have an interest or the management ability to continue the operation.”
Once you take an honest assessment, he says, you can explore several options, such as renting out your acres or enlisting the service of a farmland management company.
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Just remember to work out that first decision: What happens to the farm if I’m gone?
Once you work with advisers to create this basic framework, Brod encourages a regular review. At a minimum, review the plan every two to three years and make adjustments due to tax or circumstance changes.
