Planning for the end of life is intimidating for everyone, but when the plan includes a family business like a farm or ranch, things can get even more challenging. That’s why estate planning, that is, planning for the distribution of assets once you die, is especially important for aging farmers. The details are in the article “How farmers can start an estate plan” from Bangor Daily News.
Death and dying are not easy to talk about, but these conversations are necessary, especially if the family wants to continue as a farming or ranching family. For aging farmers and their families, here are a few tips to demystify the planning process and help get things started.
What are your goals? Think of estate planning as succession planning. This is about making decisions about retirement and handing down a business to the next generation. If you had a regular job, you’d have far less to consider. However, succession planning for a family business owner involves more resources and more people. Having a clear set of goals, makes that transition easier. Add to that list: your fears. What don’t you want to happen? If your children don’t know how much you want them to keep the farm in the family, they may take other actions after you die. Share your goals, hopes and yes, worst case scenarios.
Build a team of professionals. The number of moving pieces in a family farm means you’re going to need a strong team. That includes an estate planning attorney who has worked with other farm families, an accountant, a financial advisor and an insurance professional. Depending on your family’s communication skills, you might even consider bringing a counselor on board.
List out your assets. Don’t assume that anyone in the family knows the value of your assets. That includes deeds to land, titles of ownership for vehicles, information about any property mortgages or loans or leases. If you are leasing land to others, you’ll need the lease agreements as well as property titles. If your lease agreements are based on a handshake, your attorney may request that you formalize them. A verbal agreement may be fine while you are living, but if you should pass and your heirs don’t have the same relationship with your tenant, there could be trouble ahead.
Consider who will be in charge when you are not there. Whether you are planning to work until you die or making a retirement plan, one of the hardest decisions will be to name a successor. Inter-generational politics can be tricky. You’ll need an unbiased evaluation of who the best candidate will be to take things on. However, going into this now is better than hoping for the best. That’s when things go south.
Talk to your estate planning attorney. Just as people should start planning for their retirement as soon as they start working, planning for the transition of the family farm is something that should start when it is years in the future, not when the transition is a few months away. It’s a process that takes a long time to do right.
Reference: Bangor Daily News (March 5, 2020) “How farmers can start an estate plan”
Suggested Key Terms: Succession Planning, Estate Planning Attorney, Family Farm, Transition, Retirement
No Will? Don’t Count on a Happy Ending for Your Family
“At the time, he had gone so far as to have his will drawn up, but he hadn’t finalized it. In addition, he hadn’t authorized anyone to have power of attorney, in case of illness.”
The gentleman at the heart of this article isn’t the first, and sadly he won’t be the last, to start and not finish the process of preparing a will and all of the other documents that go into having an estate plan. People say they don’t need to do this just yet, or they are having trouble deciding who should be their executor, etc. Regardless of the reason, the end result of an unfinished estate plan is almost always a disaster for the family. It certainly is in the article “Thy will be done (and you really should get it drawn up right now)” from the San Antonio Express-News.
One week after a woman spoke to her dad about his estate plan, he became ill and was hospitalized. The man’s girlfriend became verbally abusive to family members. The sisters of the man had previously sued him, accusing him, as trustee of the father’s trust, of taking more than his fair share of the family money. The daughter was trying to pay for his care during a two-month stay in the hospital. However, without a power of attorney and in the middle of a costly lawsuit from the man’s sisters, the only way forward was declaring a “conservatorship” of her father’s assets. The father died, with no will, and with his estate under attack from his sisters.
It took two years to settle the probate case and the lawsuit between the sisters and the estate of their brother. That’s a long time to mix mourning, family strife and court actions.
The value of the father’s estate was drained by the long litigation and probate process. The daughter estimates that her father’s estate paid 13 times more than necessary, because there was no power of attorney and three times more than necessary because of the lack of a will. And making matters worse, more than 30 percent of the estate vanished because of the unfinished estate plan and poor communication between family members.
More than $500,000 remained in probate, and then was drained by a third over the course of the two years.
However, the worst part can’t be measured in money. It is the emotional cost of siblings who grew to hate other. The sisters didn’t say goodbye to their brother, or even attend his funeral.
A Gallup poll in 2016 found that only 44% of Americans have a will. Thirty-two percent of Americans over age 65 still don’t have a will. What are they waiting for? Some think they are saving their families money by not having a will, but the above example is clear proof of how wrong that thinking is. Doing an online will isn’t much better. One attorney said it best: when wills are not prepared by estate planning attorneys and they go wrong, they go very wrong.
Speak with an estate planning attorney and make sure that your family is protected from the fights, the costs and the lost time that can’t be regained.
Reference: San Antonio Express-News (March 9, 2020) “Thy will be done (and you really should get it drawn up right now)”