While you may think the best way to protect your farmland is to keep working it, the truth is that proper estate planning will is the key to preserving your hard work. This is especially true since farmlands run the risk of conversion after you pass away due to non-farmland having a higher market value.
Proper estate planning is paramount to ensuring that your farmland remains farmland to pass down from generation to generation. We understand that estate planning is different for farmers and we have helped many of our clients with their goals.
Keeping the farm in the family
According to an article titled Estate and Farm Transition Planning for Agricultural Producers, many ranchers and farmers think that they do not need to plan their estate because they plan on divvying everything up equally between the children. Unfortunately, this may result in the sale of your farm if some of your children want a cash settlement instead of the property. It is important to discuss the farming operation with your children and plan out assets accordingly.
Transferring different assets
As a farmer or a rancher, you have many different assets that you must account for. If you have livestock, for example, you may want to explore your options to transfer ownership to your children. Surprisingly, there are multiple methods to transfer a herd of livestock.
Machinery is also a concern if you own any. You must consider the tax implications, depreciation and capital gains. If you transfer ownership of all your machinery to the next generation at one time, it may have more severe tax consequences than transferring it down one piece at a time. More information about this topic is available on our webpage.