Your farm can leave a lasting legacy for your heirs, but in order for this legacy to continue, proper estate planning is in order. Estate planning for farmers is different because it brings both home and business together as one.
It’s important to protect your heirs from financial burdens after your passing. Additionally, farm estate planning is about honoring your wishes, whether that means separating farm from family or uniting them as one in the same.
Here are three tips for farm estate planning.
1. Deal With Estate Taxes Early
One of the biggest worries is often the taxes a family would have to pay after the death of a loved one. Although tax law changes may come soon, estate tax is only owed on amounts over $5.49M per person, and in most instances, this amount doubles for the surviving spouse. Farm holdings can easily top these figures.
It's all the more reason you need to plan ahead. Will your family continue to run the farm in your absence? Will you choose a succession plan that includes one of your employees?
These considerations need planning in advance, and it's only one small piece of a larger picture for your farm.
2. Make Plans for Asset Protection
An estate planning lawyer can be a trusted resource for you in setting up safeguards for asset protection. Taking legal action now can help your protect your assets.
For instance, a special use valuation is possible here in Ohio. It helps evaluate your farm as farm land, possibly reducing future tax liability and may lower the estate tax burden on your family after you pass on.
Listing your farm as a limited liability company (LLC) also provides more flexibility to your assets. An LLC designation can be beneficial in multiple ways, including reducing estate tax exposure, limiting most liability and allowing family members to buy out their interests in the property.
An irrevocable life insurance trust could also provide your farm with asset protection by creating a financial safety net to pay estate taxes.
3. Plan for the unexpected with Medicaid Planning
Estate planning means planning for what’s expected and the unexpected.
What happens if you find out you have a medical condition and need medical care for the rest of your life? An illness can lead to your absence from the farm.
When you pass, this could mean Medicaid liability for your estate. In some cases, this leads to a forced sale of the farm to pay the debt.
Proper planning can help by setting up long-term care insurance or qualifying for Medicaid now.
If you’re looking to get started with your farm estate planning, please contact us for a free consultation. Port Legal specializes in estate planning and probate law.