As hard as it might be to think about, there will come a day when you can no longer work the farm or ranch you have devoted your life to. Whether this is because of incapacitation or death, it’s vital that you make a plan now to protect your life’s work from creditors, corporations, family in-fighting, taxes, and nursing home costs to preserve the legacy you have worked so hard to build. If you want your property and business operation to stay in the family, a solid Estate Plan made well in advance can help you achieve this goal. An Estate Plan is also essential if you don’t plan to pass the farm or ranch to the next generation. We take a look at key Estate Planning considerations for farmers and ranchers in Texas and Arkansas here.
Decide What You Want and Share Your Hopes With Your Family
The first step in the process is to confront the reality that you will be gone one day and think about what you’d like to have happen when that day arrives. If your expectation is that the farm will stay in the family, you need to take action to ensure that it happens. If you don’t have children or other family members who can inherit the business, you need to put some kind of succession plan in place. Important steps to take now include:
- Talking to your family. It’s never too soon to sit down with your spouse and adult children and tell them what your hopes are for the family business after you are gone. Listen to what they have to say, even if it’s not what you want to hear. It would be a mistake to assume that someone will step in and take over the farm after you are gone without getting a firm commitment from them while you are alive and well. If they are clear about not wanting to continue farming or ranching, believe them and make alternate plans.
- Assessing your business. Is your farm profitable or struggling? Making sure you know the details about your assets, income, land holdings, and business operations is essential before you can plan for the dispensation or transition in an Estate Plan. If you need an outside assessment in order to fully understand the big picture, now is the time to do it.
- Finding an Estate Planning lawyer. You don’t have to have all the answers—you just need to know what you want. Once you have decided what you want and have the support of your family, you should meet with an Estate Planning attorney who understands the complexities of farms and ranches to figure out how to make it all happen.
What an Estate Planning Attorney Will Do
There is no one-size-fits-all Estate Plan, even for people in the same line of work. A family farm or ranch is a complex entity possibly involving land, livestock, equipment, employees, buildings, liquid assets, loans, tenants, contracts, and more. An Estate Planning attorney will help you turn your goals into reality by walking you through all of the necessary legal documents and Estate Planning tools, which might include:
- Wills & Trusts. Placing the farm in a Revocable Living Trust and executing a Will that specifies who should inherit what and when will probably form the backbone of your Estate Plan.
- Powers of Attorney. Naming trusted representatives to take care of business if you become incapacitated is vital to the continued operation of your business.
- Business succession planning. Even if your children are already involved in daily operations and are planning to take over from you, you will need to work with an attorney to ensure a smooth transition. If the plan is to sell or transfer the business, that should also be put in writing.
- Tax planning. There are tools available to protect the estate and your heirs from excessive taxes. A skilled Estate Planning attorney will be informed of current state and federal tax laws and be prepared to help you.
- Medicaid planning. What if you need a nursing home one day? Will your holdings count against you if you apply for Medicaid? Your Estate Planning attorney can help you answer those questions and make a plan that ensures continued healthcare for you when you need it.
Are You Looking for an Estate Planning Attorney in Texarkana, TX?
If you are looking for Estate Planning advice for your farm or ranch, you need to speak with an experienced Estate Planning attorney as soon as possible. Contact us online or call our Texarkana office directly at 903.223.5653. We also have offices in Tyler, Paris, Longview as well as Magnolia, AR!