Farmers in Minnesota share many attributes with farmers across the country. One concern that is generally shared is the transferring of farm ownership and related businesses to their heirs. The answer is that farmers must engage in the process of estate planning and construct, with the assistance of the estate planning attorney, a farm succession plan.
The danger of inaction can lead to a ‘fight’ between the farmer’s children after death. With no will or other documents to set up the farm succession, battles can occur due to the utter confusion that can exist in such a situation. However, like all things in life, it is easy to devise a succession plan once action is taken to start the ball rolling forward.
One thing that comes into play with respect to many farm properties is a concern for tax savings. One tool that the estate planning attorney can assist with is the establishment of a generation-skipping trust. Generally speaking, this trust is set up to transfer assets to grandchildren prior to the children.
The children may still earn the income and control the affairs of the farm, along with controlling the terms of the trust if desired. The mechanism allows for tax savings and may be useful for some families. To effectuate a fair and equal distribution of the assets, a business corporation or other business entity may also be an important way to do it.
The structure will allow the parents to distribute ownership shares in increments, even during life. A life insurance trust is another tool that serves as a funding mechanism with less tax exposure at the same time. In Minnesota, farm owners will find it necessary to obtain a qualified and experienced estate planning attorney to assure maximizing their financial returns to themselves and their heirs.
Source: agalert.com, “Succession plans can assure farms stay in the family“, Christine Souza, Oct. 19, 2016