Farm families have a lot to lose with inadequate estate planning.
You are a farmer.
You are in the business of farming.
The farm has been in the family for generations.
Perhaps your children intend to keep the a farm running after you die.
Maybe your children have different careers in mind.
Do you have some children in each of these separate camps?
According to a recent LeMars Daily Sentinel article titled “Trusts can serve as important estate planning tool for farm families,” estate planning and business succession is essential in either situation.
While a last will and testament certainly can help you organize and distribute parts of your estate, a trust is a better option for farm families.
A trust creates another entity designed to hold assets titled to it.
Any assets within this trust are governed by the rules written to provide direction for what should happen to the assets.
Trusts are especially useful when families and property are more complex.
The stakes are typical high with farm families.
Trusts can provide direction for those in multiple generations regarding rights of ownership and management.
Once a trust has been created, retitling assets to fund the trust is essential.
Depending on the asset, arrangements can be made for it to be retitled today or when you die (e.g., by beneficiary designation).
Creating a trust should not be attempted alone.
There were two main types of trusts.
These are testamentary created under a last will after probate and an irrevocable inheritance trust created under a (revocable or irrevocable) living trust without probate.
Again, a living trust is created while you are still alive.
Farm families who choose this option can further select either a revocable or irrevocable trust.
Again, unlike a living trust, a testamentary trust is created by the last will and testament after the death of the testator.
As you can see these distinctions bear repeating because people confuse them constantly.
An experienced estate planning attorney can help farm families decided whether they need a trust and the type of trust they would need.
Using a trust and discussing the plan with children can help farming families make the transfer of the farm and its operations to the next generation as smooth as possible.
Reference: LeMars (IA) Daily Sentinel (Dec. 29, 2020) “Trusts can serve as important estate planning tool for farm families”