Sometimes it's not enough to have a game plan. You need to be sure that the game plan is really implemented. A periodic check of the farm transition legacy plan is prudent.
It seemed like mom and dad had thought things through and had everything set up to transition the family dairy to the next generation. The family had a revocable trust that owned the dairy operation. The eldest son was the sole backup trustee to mom and dad so he would have control of that business when the time came.
But after dad died, it became clear there was a snag. The land that the 55-year-old son lives on with mom, where the dairy sits, that produces crops to supply the dairy with feed, was NOT owned by the trust. Mom and Dad had owned it jointly. Now mom owns it outright.
No big deal, right?
But then the two sisters got to looking at the paperwork and they decided that the son was being favored, unfairly, in the overall transition plan. They decided to take mom, who was suffering with a bit of dementia, to visit with a new attorney to discuss a new estate strategy for the land.
The sisters thought it would be better for the land to be split between the three kids. They asked mom, don't you think the land should be split evenly among us kids, mom?
She said, "yes," in a small, frail little voice.
When the new trust was created to own the land, it split control over the land among the three kids as partners with Mom.
Now the 55-year old dairyman has two new landlords who don't want him to get a "free ride" on the land. This is NOT what mom and dad had originally intended, and it's bad news for the son.
It all could have been avoided if the farm property was simply retitled into the trust with the dairy operation -- but that got overlooked.
This is a great reminder to review all the documents with your estate attorney every three to five years to be sure that the plan still fits, and that all the elements of the plan are truly in place as you intend.
If this blog has got you thinking about your own situation, get in touch with my office (email@example.com). I am always happy to visit with folks working on their transition process.
The opinions of Rich Dunn are not necessarily those of Farm Futures or the Penton Farm Progress Group.