No one likes to talk about death and taxes. Ironically, in estate planning one motivates people more than the other: fear of taxes.

The looming 2025 tax sunset reminds me much of 2012, which is the last time estate tax rules were scheduled to dramatically change. This never came to fruition, but it motivated a lot of people to update their estate plans.

Now, as we enter 2025 it seems the political environment has changed from once again the fear of significant estate tax changes to a new administration that may try to repeal the estate tax all together. However, for most family farms, the non-tax benefits of planning far outweigh those only designed for estate tax reasons.

Non-estate tax benefits

Every family farm is unique with a different set of circumstances. Certainly, events that we can’t predict or control can happen, but proactive planning provides a way to better weather those storms.

As you look at the succession of your family farm, how will you compete for future new opportunities, prepare for consolidation, manage labor shortages, government regulations, loss of land from other non-farm uses, communicate with future landowners/investors, and overcome the difficult barriers of entry for those in the next generation?

Some things you have greater control over than others.

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Estate planning versus succession

Please understand most wills and revocable living trusts are designed around estate tax laws. These documents are simply tools to distribute your assets. As I read through them, I often see multiple pages of provisions written for estate tax reasons. It is disheartening to me when I get to the final distribution page and all I find is a simple paragraph which says distribute our estate equally. Or divide the family farm which has been a combined unit for multiple generations into separate designated parcels.

Focus on succession first

Less than 2% of family farms are currently affected by estate taxes. Yet, 98% are owned by people who want to see the farm transfer to the next generation and stay in the family. Instead of focusing on the estate planning tools – such as wills, trusts, LLC’s – start first with a focus on succession.

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What does a successful farm transition outcome look like for you? Sketch an outline of key events for your farm from the story of its origin to present day. Then do the same for 5 years into the future, 10 years, and so forth. You might be surprised over the sentimental value you can generate simply by sharing your farm’s origin story.

My hope is that whatever estate planning tool you choose to distribute your assets contains multiple pages of farm continuation provisions. What may seem complex now will make things much simpler later.

Estate planning should never be only about estate taxes.

Downey has been consulting with farmers, landowners and their advisors for nearly 25 years. He is a farm business coach and transition consultant with UnCommon Farms. Reach Mike at [email protected].