- The average age of farmers in the U.S. is 58
- Around half of U.S. farmers don’t have any estate plan
- The USDA predicts that 70% of farmland will change hands by 2037
Farmers face unique circumstances for estate planning, requiring them to take extra precautions compared to the average family or business.
Individuals with agricultural operations or other large land-based holdings will be among the most likely groups who wouldn’t consider themselves “wealthy” but who would still trigger estate tax requirements upon their death. Additionally, the act of bequeathing multiple types of land and property like equipment makes inheritances incredibly complex.
Any farmers who make assumptions about how their estate will function after their passing may be just passing loads of unintended problems onto their grieving families.To avoid these complications, all Georgia farmers should form a comprehensive estate planning strategy, and they can use the help of Atlanta estate planning attorneys to get them there. With the help of a someone experienced in inheritance, real estate, and agricultural law, you can ensure that all of your goals for what you want to happen to your property after you die can be met.
Get started thinking about your own agricultural business estate planning needs today by taking a look at the following 4 most common mistakes farmers tend to make.
Mistake 1 — Not Having an Estate Plan
According to the U.S. Department of Agriculture (as cited in Agweek), around half of all farmers don’t have an estate plan. Yet, their average age in the U.S. is 58. In turn, 70% of farmland in the country is likely to be sold or inherited within the next two decades.
Despite these sobering statistics, many farmers either think their current inheritance measures are adequate or simply do not want to think about estate planning at all. Yes, it is true that no one wants to contemplate their own death, but an even more harrowing thought should be what happens to your family and your legacy after you pass on.
The fact of the matter is that most forms of “easy” estate planning, such as writing a last will and testament or naming beneficiaries to your insurance policies, are inadequate for the typical farming operation. These documents simply cannot cover all of the variables and concerns compared to a comprehensive estate plan.
For instance, say a farmer intends to bequeath their farm to their children in equally divided portions. What if one or more of the children decides they don’t want to be a farmer? Are they allowed to sell their stake to outside parties? What if you only have one child and they get seriously injured, putting their ability to perform farm work in jeopardy?
Unknowns like these can only be accounted for by considering each possibility and laying out advance measures through strong, binding legal language. You can set out all of your posthumous goals while reducing the tax burden and complications of inheritance you put upon your family after your death.
Mistake 2 — Not Keeping Your Estate Plan Updated
Once your estate plan is formed, it should be considered a living document. In other words, you should constantly revisit it and revise it according to new wishes or circumstances.
New variables arise constantly in any business, but especially in agriculture. Here are just a few examples of situations that can cause your existing estate plan to become vague or completely obsolete:
- New tax laws
- New farm subsidies
- Canceled farm subsidies and other support programs for farmers
- Changes to estate laws
- Children no longer consider farming a livelihood option, e.g. they become involved in their own business
- The farm sustains heavy losses or windfall earnings
- New property is bought, or existing property is modified
- The farmer creating his estate plan realizes they have other important goals to account for
With all of these unpredictable factors, a farmer can greatly benefit by working with an estate planning lawyer and meeting with that attorney every few years or so. An expert’s advice can keep them abreast of all new laws, and they can also help farmers put their new thoughts into action as they revise their intentions.
Mistake 3 — Thinking Joint Ownership, Joint Accounts, and Beneficiary Designations Will Be Adequate
Many farmers understand that they want to avoid putting their estate matters through probate court — usually for the sake of saving time and also preventing creditors from having the opportunity to place a lien on their estate holdings.
Knowing that probate is undesirable, these farmers may place all of their holdings in joint accounts or designate joint owners of their property. They may think that these measures, in addition to naming family members as beneficiaries on life insurance policies, should be enough to take care of all their estate planning needs.
In reality, joint accounts and joint ownership can actually make inheritances more complicated. Some farming operations may be made ineligible for certain USDA subsidies, for example, if they are jointly owned.
Your beneficiaries’ inheritance will also be made subject to federal and state estate tax laws despite these holdings skipping probate. An estate plan can help account for these tax burdens so that each beneficiary still receives a fair portion of their inheritance. Otherwise, property not held jointly may be used to pay the estate tax bill, creating unequal inheritances and unfairness.
Mistake 4 — Not Thinking About Liquidity
Another common, tragic mistake many farmers make without proper estate planning is that they overlook their families’ liquidity needs. Agricultural earnings are volatile, and the act of transferring property could create complications or tax burdens your family cannot meet. For instance, most state and federal laws require payment in full of estate taxes nine months from the date of the deceased’s death.
Since most farming assets are illiquid, your beneficiaries may be forced to sell assets like equipment at a loss in order to meet their obligations.
On the other hand, having a complete estate plan can allow you to prepare liquid assets in advance, including some specifically set aside for taxes and others to serve as a “rainy day” fund for your family to make ends meet during tight periods.
Farmers: Consider Speaking to Atlanta Estate Planning Attorneys Today
Your legacy and your way of life should be something your loved ones are intensely proud of, not anxious about. Give them the comfort and peace of mind they deserve by working with knowledgeable estate planning experts who can help you set goals, account for legal obligations, and prepare for the unexpected ahead.
You can speak with one of our Atlanta estate planning attorneys when you call us or contact us online today to schedule your appointment.