Like any other business owner, farmers need to carefully plan how the farm will be passed on to heirs. However, farmers do have some unique estate planning issues to consider.
In the eyes of the law, a farm is just a type of business. Like any other business, it can be passed to other people when the current owner passes away. However, estate planning for farms often has issues that are not as much of a concern for other types of businesses. Most farms have a lot of valuable assets, such as land and equipment, which could add up to an estate tax liability. However, farms often do not have the liquid assets to easily pay those taxes. Ohio’s County Journal and Ohio Ag Net recently discussed some ways to plan for this problem in “Estate planning for farmers: Providing for liquidity concerns,” including:
- Develop a plan to build up liquid assets that can be made available to the estate after the farmer passes away. This can be as simple as investing farm income in securities.
- Life insurance can be purchased to provide cash to beneficiaries.
- If the farm is held in partnership or as a corporation, then creating buy-sell agreements with other owners to purchase an individual’s ownership stake upon death can provide money for the deceased’s estate.
- The likelihood of the farm estate having to pay the estate tax can be reduced during the farmer’s life in several different ways, including creating a gifting plan with the help of an attorney and selling off older equipment that is no longer needed.
An experienced estate planning attorney can help you to create a plan specific for your farm.
Reference: Ohio’s County Journal and Ohio Ag Net (July 19, 2016) “Estate planning for farmers: Providing for liquidity concerns”
