Prairie Farmer Logo

According to our estate planning columnist, clinging to "control" the way you always have may affect your ability to truly control your estate plans.

Curt Ferguson

February 2, 2016

4 Min Read

We each face an uncertain future. The most stressful events in the lives of families are arguably disability and death. The impact of our material wealth on the people we care about in those events are primary objectives of good estate planning.

One could say the opposite of uncertainty is control. We long to avoid uncertainty. We want to control our future. To be downright honest about it, some of us even want to control our family and property well beyond the grave! I believe in helping people to fully develop their goals and then to plan so as to accomplish them with the greatest certainty possible.

give_control_gain_control_1_635900158853340140.jpg

But let’s consider control a bit more. What are the implications of controlling our future? Assume you have no estate plan. You own property: land, money and machinery. This certainly feels like you control it. But if you become mentally disabled you no longer get to determine anything about that property. The law provides for appointment of your legal guardian, and dictates what that guardian can do with the property. The law sets parameters for how you will be taken care of, and how your property will be used to do that.

Moving on to death without a plan, the law defines your heirs. If you are married, your spouse gets half of your estate and your children split the other half. All children receive an equal share, and every adult gets immediate and unrestricted freedom to convert it all to cash and spend it. When the assets are not liquid - like land - any child can force the sale (even what went to your spouse) in order to get his or her share of the money. Whatever the value of that property is at death is subject to state and federal estate tax. Owning property in your own name, then, means your control ends as soon as disability or death occurs.

Another route

How about owning property in joint tenancy? A joint owner never has control, because the other owner can demand liquidation of the property at any time. If your co-owner becomes disabled his guardian becomes your practical co-owner. There is a 50% chance that on death, any remaining control is lost or gained, depending on who died first. No estate taxes are avoided by joint tenancy, contrary to what some people think. Joint tenancy is worse than sole ownership in almost every way.

Estate planning is about looking ahead and taking control of the events that you legally can. Disability is not certain, but you certainly can and should think through the issues and document your wishes. Who will make for you the decisions you currently make? What are the limits on their decision making? A blanket power of attorney often does not give enough authority in some areas, and simultaneously gives too few instructions about other matters.

For example, you feel that your daughter Sue deserves the opportunity to rent your land for $150/acre, even though neighbors might pay $200. You name Sue as your power of attorney agent. You become disabled, and she, as your agent and knowing your wishes, rents your land to herself for $150/acre. The rest of your family could accuse her of self-dealing and have her removed as POA agent, or force her to put the rent up for bids and match the highest offer.

Innumerable implications

Death planning means thinking about what you want to happen to your property and your people at that time, with innumerable implications.

For both disability and death planning, trusts are among the most flexible legal tools available because you get to write down practically anything you want to happen, and the people who accept the job of trustee must follow your instructions. A revocable trust is the most flexible, since you can change it any time. Putting property in your revocable trust is an obvious step to increasing your control, since you can spell out details for what happens on disability and death.

Is an irrevocable trust, by contrast, giving up control? Although it may feel that way, it is not necessarily. Sometimes an irrevocable trust might be the only way to assure that you do control the future. Irrevocable trusts can be created with flexible features, the ability to change who gets the trust property upon your death. Irrevocable trusts can eliminate estate taxes, or protect assets from a catastrophic health care needs.

About the Author(s)

Curt Ferguson

Curt Ferguson is an attorney who owns The Estate Planning Center in Salem, Ill. Learn more at thefarmersestateplanningattorneys.com.

Subscribe to receive top agriculture news
Be informed daily with these free e-newsletters

You May Also Like