Tennessee farmers invest financial resources and time to create a sustainable family business. Farmers have unique estate planning needs, as some of their children may follow in their agricultural footsteps but others may not.
University of Minnesota Extension provides tips to help you plan a suitable distribution of your assets to both farming and non-farming heirs.
A fair distribution may not be equal
Your farm children help build your estate by contributing their energy to the business, and they may make financial concessions in their younger years with the promise of inheriting farm assets. You may fund college tuition for your non-farm children, effectively giving them an early inheritance. As a result, it may not make sense for heirs to divide your assets in equal shares.
You can use creative estate planning strategies
Estate planning tools may provide you with options for distributing assets fairly:
- You can tailor your will to distribute farm assets to children continuing the business and non-farm assets to others. As you structure your distributions, you can take into account payments and gifts you make during your lifetime.
- You can enter into purchase and sale agreements to convey farm assets either directly or through trusts. These agreements will allow farm heirs to purchase agricultural assets at a stated price and on specific payment terms. Non-farm heirs would receive their share of your estate in the form of contract payments.
- You may buy life insurance and name your non-farm offspring as beneficiaries. They would receive insurance proceeds, and the children carrying on your agricultural legacy would get the farm assets.
With proper planning, you can direct the distribution of your assets in a manner consistent with your wishes. Our website has information about estate planning strategies.