535 Fifth Avenue, 4th floor
New York, NY 10017
Office: 212-427-2049
Fax: 212-202-6077
Skype: Cari.Rincker
cari@rinckerlaw.com

With Farm Estate Planning, Start With Your Goals

Family farm

Your objectives will drive the entire estate-planning process, so it is important to clearly articulate your goals. These goals should serve as a guidepost to your estate-planning attorney in helping to formulate the correct game plan. It might not be possible to fully meet all of your goals; therefore, when you meet with your estate-planning lawyer, make sure to emphasize your priorities (which may change overtime).
It’s important to stress that the estate planning process is a very individual process. No two farm families are the same — nor are their objectives. Generally speaking, the following are common priorities among farm families that may be of concern:

(1) To have enough income through the retirement years. Keep in mind that it is impossible to accurately predict future medical expenses and how long a person will live, so liberally plan to have ample cash. Statistically, women live longer than men thus should consequently save more for retirement.

(2) To avoid/reduce the estate tax (i.e., the “death tax”) and/or mitigate probate expenses to help pass on as much wealth as possible to the heir(s). Although not taxable income, keep in mind that life insurance is federal estate taxable. Business planning is one strategy that could be helpful in this area. Tying up the farm property with multiple layers of business entities reduces its fair market value (“FMV”) (but creating more administrative overhead – and headache).

(3) To pass the family farm down to a future generation — whether it be to the children, grandchildren or extended family. It’s paramount for these families to think about transferring the management responsibility of the farm to the future generation (e.g., phasing-out period) to ensure that they are properly trained.

(4) To treat children equally keeping in mind gifts made during the life of the children (including help with advanced professional degrees, the purchase of a home or other major assets, or starting a business).

(5) To give the spouse ownership. Many farm women are especially concerned about their ability to manage the finances and/or the labor of the farm or agri-business if their husbands predecease them.

This is an excerpt from my book that I co-authored with Pat Dillon, an Iowa food and agriculture lawyer and author of this Iowa agriculture law book.  You can purchase a copy of the book “Field Guide:  Legal Guide for New York Farmers and Food Entrepreneurs” on Amazon.com.  A new (more user-friendly) Kindle version of my book has been recently uploaded (only $9.99 or $2.99, if you own the hard copy of the book). 

Disclaimer:
"This blog is for informational purposes only and is not intended to create an attorney-client relationship. It is recommended that you speak to an attorney licensed in your jurisdiction before relying on the information in this blog."

Leave a Reply

Note: Your email address will not be published. Required fields are marked *