Farmers take care of the land. They grow crops, tend to animals and work long hours. They are not always aware of how estate planning can benefit them when it comes time to pass the family farm to the next generation.
What are three key reasons to consider estate planning for the family farm?
- Federal estate taxes are due on an inheritance worth more than $5.2 million ($10.5 million for one passed down by a married couple). Land appreciates in value. If a farmer has not had his property appraised recently, he might be unaware of its worth and leave his heirs a huge federal tax burden.
- A farmer with two or more children might want to split his estate equally between them. This might seem fair, but what if only one child wants to work the farm? Do the other children have a say in how to manage the property? Do they receive annual income from the farm?
- Transferring the farm directly to a child might seem like an easy way to pass the property to the next generation. This approach might, however, cause issues down the road. What if the child files for bankruptcy in the future? Will creditors take possession of the farm? Or what if a married child receives the farm but then files for divorce? Will his ex-spouse end up with the property?
These are just three situations that make estate planning vital when it comes to the family farm. If you are ready to plan for your farm’s future, then contact us. We are AgriLegacy, and we keep family farms in the family.
