When it comes to the business of family farming, there are special considerations to passing on assets to one’s heirs through estate planning.
Farms generally do not only include land and crops but a pretty expensive tax liability from farm equipment, and they often lack liquid assets to pay taxes as Ohio’s County Journal and Ohio Ag Net recently discussed in “Estate planning for farmers: Providing for liquidity concerns.”
Planning considerations include:
- Develop a plan to build up liquid assets that can be made available to the estate after the farmer passes away. This can be as simple as investing farm income in securities.
- Life insurance can be purchased to provide cash to beneficiaries.
- If the farm is held in partnership or as a corporation, then creating buy-sell agreements with other owners to purchase an individual’s ownership stake upon death can provide money for the deceased’s estate.
- The likelihood of the farm estate having to pay the estate tax can be reduced during the farmer’s life in several different ways, including creating a gifting plan with the help of an attorney and selling off older equipment that is no longer needed.
If you have a farm, seek an estate planning attorney to help you plan for tax and business succession issues.
Reference: Ohio’s County Journal and Ohio Ag Net (July 19, 2016) “Estate planning for farmers: Providing for liquidity concerns”
