As an owner, your farm is an important part of your life, and it may have been in your family for generations. It is never too soon to put a plan together to address what happens to the family farm after your death. One of your fears may be that once you are gone, the family will no longer be able to keep the farm, and generations of tireless work will be lost forever. One way to ensure that your farm remains in the family is with a trust.
What is a Trust?
A trust is a legal vehicle that you can use to distribute assets before or after death. A living trust is utilized during the owner’s lifetime, while a testamentary trust is used following death. The trust is a way to provide for the distribution and management of assets and is useful for large estates such as family farms. There are several main objectives of a farm trust. These include avoiding probate, limiting tax liability, and providing for control of the farm following the owner or grantor’s death. The property owner or person who creates the trust is called the grantor.
Benefits of a Trust
A trust can be useful as a way to transfer a farm after the owner’s death. A farm is a complex business, and a trust will help keep it running properly following the owner’s death. The trust carries out the wishes of the owner. The trust handles the management of the farm in accordance with your desires and in the best interest of the beneficiaries. A trust protects the farm and makes sure that it will continue to be properly managed in the future. A trust is also helpful when a farm owner has several beneficiaries, some of whom do not live or work on the farm. A trust can help families because it defines how to handle the many complex issues that can arise.
Trusts can be useful in various situations, but when you utilize them for the family farm, there are some special considerations you must make. Farms are unlike many other types of assets because the land itself is considered very valuable. Farm equipment must also be made part of the estate plan. There may be water, wind, or mineral rights that you need to include in a trust. If the farm has livestock, there may need to be livestock branding that must be transferred. You will also need to address the needs of any lienholders. You will also need to decide how to distribute the farm’s assets when there are multiple beneficiaries, including some who may not work on the farm.
Transferring farm ownership can be extremely complex. There are many issues that you need to address, but you can make certain that the farm remains intact when you take the time to create a trust. To learn more about farm trusts, contact our experienced attorneys at Moen Sheehan Meyer, Ltd at (608) 784-8310 or online.