When you pass away, what will happen to your farmland? Maybe it’s land that has been in your family for generations. For many families, saving the family farm is important.
Without a specific estate plan in place, the land is at risk. You may even know families like that – where they lost part of the land to estate taxes, family disputes or creditors. The best way to lose the farm is:
•Don’t do anything. Just die and see what your kids and the courts figure out.
•Leave it to your kids in your will, without the instructions or protections of a trust.
How to Protect the Family Farm
Many of our clients own farmland, and we understand how important it is to protect that land, taking into consideration things like:
•Who is operating the land now, and who will operate it in the future?
•How do we treat all children “fairly” even if the land is not going to all the children?
•How do we avoid estate taxes at death? Particularly with the dramatic increases in land values.
There are 6 specific things that can be done, with the help of an experienced estate planning attorney, to protect and save the farm for future generations:
1. Plan ahead for long-term care. The biggest threat to your farmland is the future need for long-term care. Nearly 70% of people over the age of 65 will need some sort of long-term care, and it’s usually quite expensive.
2. Assist in choosing a good “helper” who will manage the farm well.
3. Coordinate financial tools such as life insurance, to make things “fair” between the farming and non-farming kids.
4. Minimize capital gains taxes now and at the next generation by using a trust or well-timed transfers to kids.
5. Use a “nest egg” trust to avoid long-term care risks that can result in liens being put on the farm or even loss of the land altogether.
6. Create protections from kids’ divorces or financial problems that may arise in the future.
Let us help your family prepare to transfer farmland smoothly, the way you want, while avoiding taxes. Call our office at (217) 726-9200 to find out more about ways we can help you protect your family farmland.