Editor’s note: This is the second step in the three-part “DAD” process.

When transferring a farm business from one generation to the next, remember this: Evading taxes is illegal, but avoiding taxes is the American way.

To accomplish that, you probably need some help — especially since the current federal estate tax limit of $13.61 million is due to sunset at the end of 2025.

This exemption — which increased substantially under the Tax Cuts and Jobs Act of 2017 but was limited to eight years at that rate —is a key planning element for many farmers. If it’s not renewed, the limit will drop by about half.

“Historically, the estate tax exemption has always gone up,” says Missouri lawyer Connie Haden. However, the jump in 2017 was big. In preparation for expected changes, Haden is prepping paperwork for clients to be able to give large gifts structured in the way that best benefits the family and the farm.

Changing tax policy is just one element of farm succession that’s dynamic, Haden says.

“Your situation changes. The law changes,” she says. And that’s why it’s important to write a plan and then regularly update it.

The complexity and the cost are two of the reasons families put off farm succession planning. But what does it cost if a farm owner leaves this world without a plan? That’s the question Davon Cook, a family business consultant at Pinion, asks people to consider.

Related:3 steps to succession success

“Fail to plan, and you plan to fail,” Cook says, invoking one of those undeniable adages.

She admits that sounds “a bit dire and preachy.” But she doesn’t back away from the reality of it.

Neither does Mike Downey, farm business coach and transition consultant with UnCommon Farms. During planning, those conversations delve deeply into two other aspects: farm goals and fairness.

“It’s a good question to identify what the long-term intentions and goals are,” Downey says.

Ensuring the farm is sustained into the next generation is at the heart of these emotionally charged financial decisions.

Financial and legal expertise is critical for ownership and estate transitions, Cook says.

Connect with right advisers

Putting it down on paper with the assistance of people with agricultural estate, tax and transition planning expertise — which sometimes means three different people — will move the plan forward according to the current generation’s wishes.

“Once a mom and dad aren’t here anymore, statistically speaking, someone — or someone’s spouse, or friend, or financial adviser — is going to assign dollar signs to what they’ve thought of as the family farm. That can lead to some trouble,” Downey says.

Finally, not all attorneys or accountants are experienced in this area. You may need a specialist beyond the person who does your taxes and land deals.

The ultimate goal here goes beyond minimizing the tax bill and supporting the farm — and that’s why taking that first most difficult step is critical.

“The primary purpose of good estate planning is to preserve family relationships,” Haden says.

3-part process

Here’s a refresher on the three steps to transition: