The message was pretty clear. I attended a farm estate planning workshop last week in Norfolk, and the experts conducting the meeting told a packed room that if they didn’t make plans now for how their land will be transferred to the next generation, the state will make those decisions for them.
The goals of transfer are simple. Avoid undue taxation. Meet the goals of family members and protect the assets of the farm. The goals might be simple, but deciding how those goals will be carried out can be challenging.
In our family, my parents began talking about these same issues with my brother and me when we were still in grade school. They didn’t come up with a plan then, but to their credit, they started thinking about it.
Before deciding what to do with the estate, you have to decide what the estate actually contains. Think about all that you own, how it is owned and if there is debt against it. Sometimes establishing what the estate actually is might be the toughest part.
Think about who you want to receive the estate. Then plan how the estate can be transferred to the beneficiaries.
Planning is the first step. Meet with family members who are involved and talk about issues, concerns and long-term dreams when everyone is still healthy and emotions are not heightened and no decisions are under a specific time restraint. Write everything down on paper. Once the goals are established, build a team of experts – attorney, financial planners, Extension educators, tax experts and family members – to figure out the best way to carry out the goals.
No situation is the same. Every farm and every family will come to different conclusions on how to carry out their goals. The hardest part for farming parents might be deciding how to hand on the farm between farming children and non-farming children.
Parents often start out with the idea that equal distribution is the fairest way to accomplish this, but most experts I’ve heard in the past few years say that it doesn’t have to be that way. Sweat from farming children is worth something. Equal is not always possible under these circumstances, so the parents might have to be creative.
They have to decide if they want their farm sold, cut up into pieces or kept together as one farm.
This is very heavy stuff to be thinking about, but parents who put time, effort and thought into the process are doing their children a big favor in my book. And they could secure the future of their farm and their farming children on the land, which is a goal that many generational farming families have.