Preserving the Family Farm for the Next Generation
Serving Clients Throughout North Central Missouri
As all farm families know, there are many things in life, such as the weather, over which we have no control. However, one thing we do have control over is whether we have prepared a proper estate plan that will protect the family farm from the different concerns that arise upon the death of a parent.
Family farms are the lifeblood of many families and communities. There is no “one size fits all” solution to properly transferring the family farm from one generation to the next. What works well for one farm family may not be the method that works best for another. Due to the changing world we live in, the approach our parents or grandparents used for transferring the farm may not be the best method for doing so today. Life on a farm is unique, and it carries certain values that most city attorneys just can’t understand. It is important to work with an attorney who can relate to your world. Michael J. O’Loughlin was raised in rural Missouri and has been helping farm families for over 16 years.
To effectively transfer a family farm from one generation to the next, two concerns need to be addressed. First, it’s important to protect the farm from taxes, fees, government interference and nursing home costs. Second, it’s a priority to deal with the farm in such a way that family relationships and the farm are both preserved. People often say “my children get along well, they will be fair to one another and work things out.” Hopefully this is correct. However, sometimes even in the best of families, disagreements arise between siblings when the parents die. Sometimes these disagreements are generated by the son-in-law or daughter-in-law who see the cash value of the farm if it were sold. A proper estate plan that details what will occur with the farm upon the parent’s death can greatly reduce the risk that disagreements will occur among the children.
When Michael meets with Clients, he listens carefully to his Clients’ thoughts and concerns on what might occur with their family and their farm upon their death. He understands that family is the heart of a family farm and is the number one priority. Clients feel comfortable talking with Michael about these important topics. As clients tell Michael what is important to them regarding their farm, he helps them make a list of their objectives. Next, he draws upon his many years of experience to explain different methods to accomplish those objectives, and then discusses the advantages and disadvantages to the various solutions. Michael believes his role is to put different ideas on the table, and then let the Client decide which ideas will work best for their family. There is no right or wrong decision. Michael believes only the Client knows what is best for their particular family. After Clients make their decision, Michael then prepares the documents designed to ensure the parent’s desires are followed.
Listed below are some questions that are helpful for a Client to consider when passing a family farm from one generation to the next.
Upon your death:
- Overall, do you want all your children to receive an equal portion of your assets (which includes your farm, money in the bank and other financial assets)?
- What do you hope happens to your family farm? Do you want to transfer it to your children and let them decide? Or do you want to leave a structure in place that will guide your children’s decisions?
- If you give the entire farm to one child, how many non-farm assets can be given to your other children? How will your children feel about that?
- Will the farm be distributed equally to all the children?
- a. If so, can the children sell the farm?
- b. If the children are allowed to sell the farm, is it important to require that the selling child give the other children the first right to purchase the farm?
- c. If you do not want the farm sold, should it be held in trust for your children’s benefit so they can use it, get the income from it, but never sell or mortgage it?
- d. If it’s held in trust, who should be in charge of running the farm?
- Is it important that the farm be protected from a child’s divorce or lawsuits?
- What will your children’s relationships with one another be like after your death?
These are just a few examples of questions that can be discussed with Michael. There are dozens of methods available to protect a family farm. However, only you know what is best for your family. Michael can guide you as you choose the methods that will work best for your particular family farm.
We believe the most important legacy you can leave behind is your family and the relationships they have with one another. There is no right or wrong way to pass a family farm from one generation to the next. Only the parent knows what is best for their particular family. However, the key is to prepare a thorough estate plan that will be a guide to the children after a parent has died. A well thought out, detailed estate plan can increase the likelihood that the caring relationships children have with one another will endure through the death of the parents, and continue from one generation to the next.
How do you begin preparing an estate plan to protect your family farm? The first step is to find the right attorney. The same approach used by someone with merely “cash investments” and a neighborhood house will often not work for a farm family. Many attorneys say they do estate planning. However, it’s important to find an attorney who knows farming and has particular experience helping families pass the farm from one generation to the next. When deciding which attorney is right for you, it is helpful to ask the lawyer these questions:
- What percentage of your business is devoted to estate planning for farmers?
- How many years have you been helping farmers?
- Have you seen those estate plans carried out completely and work well?
- How will you ensure that a family’s estate plan will stay current with the law?
There are so many things in life we cannot control. We cannot control the weather, our health, and the fact that the world has become far more complicated than it used to be. However, one thing we do have control over is whether we have prepared a proper estate plan that can protect against the different surprises life might throw at you, your farm and your family.
To learn more about the steps you can take to protect your family farm please call our office at 660-833-4606 or e-mail us at ClientCare@MoTrustLaw.com to schedule a consultation with Michael at no charge.
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