Fair doesn't mean equal and stacking hay 30 years ago does not entitle you to an equal share of the farm.
Estate planning is the systematic attempt to transfer your property and assets intact to your heirs, while minimizing taxation and legal complications. Estate plans often strive to do more than simply pass assets on; they attempt to achieve long-term stability and an equitable division between heirs. You have a board room table and a kitchen table to both sit and make decisions. They are often times not the same decisions at each table.
State laws and federal laws govern estate planning. Farming operations, which often combine close family relationships with complicated issues of ownership and business responsibility, require foresight and careful planning to pass from generation to generation. When creating an estate plan, you should consult an experienced ag lawattorney who knows farming in order to ensure that your farm and your family get the benefit of your foresight.
If your heirs intend to continue farming, your estate planning will be more difficult. You should not sacrifice a foundation of sound business practices to maintain equity or balance in your estate planning. In order to continue operations into the long-term future, you and your heirs must put the needs of the farm first. Personal relationships, the distribution of income between farming and non-farming heirs, and the distribution of work between your heirs can all cause stress or make operations difficult or impossible. You should strive to settle as many issues as possible during the estate planning process, so that your heirs will not be burdened with difficult decisions after the farming operation is transferred upon death.
One child being told to buy out the other three at your death is not an inheritance to the child writing the check.
Larger operations should consider the federal estate tax. Only very large estates are subject to this tax, but large farms can find themselves subject to this tax by virtue of land value, regardless of cash flow. You should determine whether this obligation will apply in your situation.
A vital part of your estate planning must be the preparation of a will. Without a will, your assets will be distributed in accordance with the intestate probate code, which is a guess at what the state thinks you would want. This distribution can obviously create severe problems for a farm.
There are other assets, such as life insurance or jointly held assets, which must be distributed in accordance with requirements outside of the wishes in a will. In particular, assets held by trusts are not legally the property of the trustee or the creator of the trust. There are several different types of trust, and each has specific legal requirements and duties.
The importance and complication of estate planning means that you cannot start too soon. You should also get the counsel of an experienced ag attorney. A mistake during this process can have repercussions through your family for generations.
If you would like to schedule a initial consultation contact an Iowa Ag attorney, representing clients in West Union, Iowa at the Dillon Law P.C. Give us a call at (563) 578-1850 or complete our inquiry form.