Snow might have been falling last week, but before you know it, you’ll be planting — or fidgeting as you wait for a field to dry up so you can get back out there. When you’re eventually enjoying long hours in the cab this spring, here are some estate and legacy topics to ponder.
Thinking about your legacy really is reflecting on your life: the present effect you are having on others and the way your accumulated efforts will affect others when your time on Earth ends.
You might object, “No, the only estate planning issue for me is how to avoid the taxes!” Well, of course, no one wants to pay more taxes than necessary. But is that just an excuse to avoid dealing with the more personal questions? Deep down, do you justify your procrastination until some easy tax solution is offered to you?
Have you worked through all the nontax issues? Have you decided specifically who will get what, and when, and with what kind of terms, conditions, protections and benefits? Have you figured out how to be fair, especially where things are not going to be equal?
If you are sure you know all those answers, have you taken the legal steps to make it happen? Or is it just in your mind, and you haven’t committed it to writing yet?
Maybe you’ve written it down … but notes on a yellow pad (or your iPad) don’t count if your last legal documents say otherwise.
One of the worst things you can do to your family is to have a simple will or trust that says (for instance) “divide everything equally,” but then informally tell your executor or trustee to divide things in some other, more detailed way, such as “according to the yellow pad.”
If your executor or trustee is the child who you decided should get more than an equal share, they are specifically prohibited from honoring the yellow pad.
You might be one of the many farmers who don’t have it all spelled out. Maybe you’re dragging your feet because you think it must be perfect before you put it in writing. If you don’t die or get dementia before you arrive at the perfect solution, this might work out.
But just in case your life isn’t perfect, you should go ahead and get your current best ideas into a legal plan. Just make sure that it is a plan that is easily amendable. Most of my clients update their estate plans every couple of years. It should be easy and routine to amend as your solutions get clearer.
So, during those long days on the tractor, ask yourself tough questions. See how close you can get to the perfect solutions. Think about how your farm is going to operate into the next generation. What are you seeing now, and what do you want to see as you retire … or make more room for your successor? What will the family reunions look like five or 10 years after you are gone?
Here are some specific questions to ponder and discuss with your family:
- Is your successor happy in their current role? Do they feel confident in their future? Do they know what to expect as you retire?
- Is your successor excited about farming? Is it in their blood or just a job?
- Does your successor know what to expect in the end … when you die? Do they see themselves as the next careful steward of the family farming legacy?
- Do your nonfarming heirs appreciate the contribution of the successor farmer? Years after you are gone, will they still be cheering the one who is carrying on your legacy?
- Do you want nonfarming heirs to inherit some of the farm? If you were dividing the land out, who would get what tracts? What stipulations would you want on the land?
- Do the nonfarmers feel entitled to an equal share of everything? Might they be inclined to convert it all to cash as soon as possible? Does that bother you?
Taxes are an obnoxious speed bump in estate and succession planning. But failing to get the personal stuff right is a bridge out that can wreck your family forever. You have some thinking time available now. Use some of it to think about your legacy. Then make sure you follow through with a legal plan to match.
Attorney Curt Ferguson owns The Estate Planning Center in Salem, IL. Learn more at www.thefarmersestateplanningattorneys.com.