Why Farmers Need an Estate Plan
While farming is a family affair (the USDA says 98% of all farms are family-run), it is still a business. As with any business, you will want to ensure everything is legally documented so that, in the event of your death, it is operated the way you want. For farmers, however, there are several important steps to to ensure your farm is taken care of after your death —how it will be run, who will run it, how it will be divided up, and so on.
The best way to do this is with an Estate Plan. An Estate Plan can keep your farm and its assets within your family and make sure that your business and other affairs are handled as you see fit.
What Is an Estate Plan?
When people think of how they want things handled after their death, they think of a will. While this is important for dividing personal assets and naming guardianship for your children, an Estate Plan for a farm requires more.
An Estate Plan outlines how your farm operates, who you want in charge of specific aspects, and how you want things divided.
Why Is Estate Planning Important for Farmers?
An Estate Plan prevents confusion with your farm, its business plan, and the division of its assets once you’re gone.
Without an Estate Plan, your farm could very well be distributed however the state sees fit, including selling the land to residential or business developers, or it could result in heirs fighting over how things should be run or divided up.
Do You Need a Lawyer for an Estate Plan?
A good Estate Plan will include professionals and advisors to put everything together. Because of the many moving parts, a good lawyer can coordinate everything and ensure your heirs have an executable plan after your death so that you can focus on your farm.
Without a lawyer, you leave your property and legacy open to misunderstandings and conflicts that can hurt your estate.
The Benefits of a Farm Estate Plan
According to the University of Nevada, Reno, a well-thought Estate Plan can help farmers do these things:
- Transfer Ownership Rights – If you want your family farm to stay in your family, an Estate Plan ensures that it will be passed along to the intended party(ies) with as little complication as possible.
- Reduce Estate Taxes – Transferring ownership of assets can result in big tax bills. A knowledgeable professional will help limit the taxes the estate has to pay and keep more cash on hand.
- Secures a Financial Future – The state can distribute your farm as it sees fit without proper documentation saying how things should be allocated. An Estate Plan can also cover the medical care you want and funeral arrangements, keeping the burden off the shoulders of your heirs.
- Keeps Your Land in Agriculture – If there’s no paperwork showing where your farmland should go, the state can acquire it and sell it to developers.
An Estate Plan has different mechanisms that can ensure that your farm or ranch will continue to be actively used in agriculture in the future (such as for conservation easements) even if your family decides to no longer farm the land.
When Should Farmers Start Planning Their Estate?
With something as important as your farm, your business, and your family, it is best to start planning for the future as soon as possible. A properly drafted and enforceable Estate Plan offers your farm significant legal protections, including avoiding probate court and ensuring other financial advantages.
Our Arkansas Estate Lawyers Can Help
Estate Planning conversations can be challenging and awkward; however, failure to prepare could cause serious harm to your family in the long run and impact everything you have worked for.
To learn more about Estate Planning in Arkansas and for help drafting a will and other documents, we recommend calling an Estate Planning attorney immediately. The Law Group of Northwest Arkansas LLP regularly assists members of the local agricultural industry and can get you started preserving and protecting your farm.
Reach out through our online form or call (479) 316-2584 to set up an initial consultation.