Estate planning is simplyessential to farmers and the family farm itself â€“ just as important as theequipment, livestock, or crops involved. Unfortunately, estate planning is tooeasily overlooked with all of the day-to-day work to be done.
A recent article in USA Today, titled â€œAs farmers age, planning for the future oftheir business grows,â€ explored this common problem.
Land is one of those things thatseldom loses value. Agriculture, by definition, requires land (and lots of it)to operate on a profitable scale these days. Consequently, modern farms findthemselves racking up a potentially hefty future estate tax bill on the basisof their land values alone.
Problem: When the land valuerepresents the lionâ€™s share of the estate value itself, then what happens whenthe estate tax bill comes due with only the land to pay the tab? Selling thefarm would be akin to killing the goose that lays the golden eggs for thefarming family. To make matters worse, the owners of family farms are gettingup in years, and so time is of the essence when it comes to making plans tosave these family farms.
The good news is that today,unlike for much of the last half decade or so, we have fairly firm estate andgift tax laws. Therefore, farmers and their advisors can make estate plansbased on more than gut and intuition.
So, how do you pass on thefamily farm? Even more important, how will you pass it intact and who will runit after you do? These are questions that need an answer, sooner rather thanlater.