Your “estate plan,” however, should not be your farm’s succession plan. Succession planning is a “process” – “not an event,” … an estate plan is a piece of the process that is succession planning.
Farm and family. Perhaps more than any other kind of industry or property, planning for the succession of the family farm poses a significant challenge to the estate planner.
Some of these challenges are described in a recent article in Agri-View titled Estate planning lays framework for smooth transition.
When the farm is a family farm, and therefore also the family business, planning for your estate is really about planning for the succession of the business and the farm. This can be a delicate process, but it is better to start the process sooner rather than later.
For one thing, don’t overlook the fact that farmland values can trigger estate taxes (real estate bubbles aside, land is the only thing that consistently grows in value – "because God is not making any more of it" – and farms are all about land). Accordingly, some rather sophisticated estate planning (and liquidity planning) may be in order, or the family farm could be lost to the IRS. Not good.
Estate taxes aside, there are many other considerations to secure the future of the “family” element of the family farm. For example, who will inherit the farm, let alone continue to operate it? What if your children live in the suburbs and work every day downtown? Who will actually do the “farming?” Perhaps renting or sharecropping might be more practical. Regardless, these are the kinds of practical real-world matters that ought to be decided with a legal framework to ensure succession success.
So, if you are a farm-owner, and particularly the owner of a family farm, then there is much work to be done. While I recommend reading the original article, be sure to engage competent legal counsel, as well as any farm extension agent assistance that may be available.
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Reference: Agri-View (March 29, 2012) “Estate planning lays framework for smooth transition”