How do you ensure that your farm or ranch remains an active operation and stays in the family after you’ve passed away? Perhaps the best way is to have an estate plan, including a succession plan, in place far in advance. It’s also important to include your family members in the planning process.
What happens without a plan? Simply put, without a plan, the future of your family farm is at risk. For example, as the older generation ages, the need for long-term care becomes an ever-increasing possibility. Many farm families simply don’t have the cash to pay for expensive nursing home or assisted living care. While the farm or ranch ledgers might indicate a high net worth, that money is generally tied up in non-liquid assets like land and equipment. With no plan in place, paying for long-term care often means selling off farm assets and jeopardizing the ability to continue to operate.
What about when the older generation passes away? With no plan, it can be a struggle for the children to keep the farm or ranch operational, especially if some siblings work on the farm and others don’t. Where there’s no clear plan for who will take over, it’s not unusual for no one to take over. Instead, the farm is sold and the children take the cash and move on with their lives.
These are not situations any farm family wants to face. Fortunately, having a workable plan in place before any of these issues arise can be key to the survival of the family farm. With the help of an experienced estate planning attorney, alternatives can be found for paying for long-term care. The older and younger generations of the family can cooperate to establish a detailed plan for who will take over when the time comes, including provisions for each family member’s responsibilities and compensation. Plus, any number of potential arguments can be headed off – or at least resolved while everyone is alive, healthy, and able to deal with the issues.