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Here’s Why You Need Estate Planning

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Estate planning for farmers
Estate planning ensures that children don’t inherit property before they’re mature enough to properly manage it.

It’s always the right time to do your estate planning, but it’s most critical when you have beneficiaries who are minors or with special needs, says the Capital Press in the recent article, “Ag Finance: Why you need to do estate planning.”

While it’s likely that most adult children can work things out, even if it’s costly and time-consuming in probate, minor young children must have protections in place. Wills are frequently used, which means the estate generally goes to the child when he reaches age 18. However, few teens can manage major property, such as a farm or a business, at that age. A trust can help, by directing that the property will be held for him by a trustee until a certain age, such as 25 or 30.

Probate is the default process for administering an estate after someone’s death. A Will or other documents are presented in court and a Personal Representative (Executor) is appointed to manage it. It also gives creditors a chance to present claims for money owed to them. Distribution of assets will occur only after all proper notices have been issued, and all outstanding bills have been paid.

Probate can be expensive. However, wise estate planning can help most families avoid this and ensure the transition of wealth and property in a smooth manner. Talk to an experienced estate planning attorney about establishing a trust. The person who owns the farm, business, home, or other assets, can name themselves as the beneficiaries during their lifetime, and instruct to whom it will pass after their death. A living trust can be amended or revoked at any time, if circumstances change.

The title of the property is transferred to the trust. With a trust, it’s easier to avoid probate, and the property can transition to the beneficiaries without having to go to court. Living trusts also help in the event of incapacity or a disease, like Alzheimer’s, to avoid guardianship. It can also help to decrease capital gains taxes, since the property transfers before their death.

If you have several children, but only a couple of them work with you on the farm or in your business, an attorney can help you decide how to divide your estate equitably.

Reference: Capital Press (December 20, 2018) “Ag Finance: Why you need to do estate planning”