For farmers, estate planning is vital because not only does it assist in reducing taxes, but it also provides the framework for transferring the farm to the next generation. A recent article urges farmers to begin the process of estate planning now.
According to estate planning consultant Dave Thompson, many farmers put off estate planning because they either believe it is too complicated, do not want to face their own mortality, or believe it is unnecessary. Thompson urges such farmers to “get on the planning bus. The sooner you start, the better off you will be.” Thompson further noted that when estate planning is put off, the results often become disastrous for family relations.
There are many questions to consider in the estate planning process. Important questions include who will be the successor on the farm, where all assets are located, what the assets are worth, what names are on the various deeds, how to distribute the estate fairly to all beneficiaries, and how to transfer the property.
In many instances, one child will want to take over the farm individually. In order to equalize the estate between other children, many farmers may choose to purchase life insurance so that the proceeds go to the other children. Farmers may also choose to gift property or cash to the children who choose not to inherit the farm.