To have a successful farm, thoughtful planning must be done every season. Your life is no different. To properly prepare for the next season in your life and the lives of your loved ones, you need a well-executed estate plan. Consider the following planning tools when crafting a foundational plan to protect yourself, your loved ones, your business, and your legacy. Farm estate planning is crucial to safeguarding your assets.
A revocable living trust is a tool in which a trustee is appointed to manage the accounts and property that you transfer to the trust for the benefit of one or more beneficiaries. To fund the trust, you change the ownership of your accounts and property to your name as the trustee. Typically, you serve as the initial trustee and the primary beneficiary while you are alive and well. If you become incapacitated (unable to manage your affairs), the backup trustee steps in and manages the trust for your benefit with little interruption and less potential for costly court involvement. Upon your death, the backup trustee manages and distributes the money and property according to your instructions in the trust document, usually without court involvement. Probate is unnecessary because the accounts and property are deemed owned by the trust, and you have already determined what will happen to them. A specifically crafted trust has the additional benefit of protecting your precious asset (the farm) from your beneficiaries’ creditors.
IMPORTANT: Work with an experienced estate planning attorney to ensure that any trust created and funded with farming assets (real estate, equipment, etc.) is structured to not disqualify you from or reduce any government subsidies you could receive. Such details are essential aspects of farm estate planning.
A financial power of attorney is a written document in which you appoint a person to handle various financial and property transactions on your behalf when you are alive but cannot handle them yourself. This can include signing contracts for you, making deposits into your bank account, managing property, paying taxes, and opening new accounts for you. The specific powers granted to an agent under a power of attorney will depend on your wishes and what you list in the document. Also, depending on your state law, you may be able to dictate when your chosen agent can step in and act on your behalf. If your land, equipment, and associated bank accounts are in your name only, it is essential to have this tool in place. Hence, someone has the authority to maintain your business and associated transactions should you be unable to do so. Incorporating elements like a financial power of attorney into farm estate planning is vital.
Farming can be a very strenuous career. Having a medical power of attorney in place is, therefore, crucial. This document allows you to name an individual to make medical decisions on your behalf if you cannot. While this power applies only if you are incapacitated or otherwise unable to communicate your wishes, it will save your family a lot of time and money by avoiding the court process of having a judge appoint someone to make decisions for you. In the context of farm estate planning, it's an indispensable tool.
Depending on the value of everything you own (including your farming operation), you may need to include more advanced tools in your estate plan. We can craft a plan that may reduce the state or federal estate tax owed at your death, offer additional liability protections, or provide liquidity to address your unique situation. In complex cases of farm estate planning, utilizing advanced strategies may be required.
We understand how important your farm and family are to you. We want to help ensure that you are adequately protected and that everything is in place to transition your farming legacy to the next generation properly. Book a FREE Discovery Call so we can evaluate your unique situation and craft a plan to help ensure that your legacy will be a lasting one.
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14425 Falcon Head Blvd
Bldg E-100
Austin, TX 78738
