If something happened to you today, would your family and farm business be taken care of? Would the farm remain in the family? Who would you want to run the family farm? What if everything you had worked for was lost in an instant due to a death, disability, or divorce?
Do you have a plan in place to safeguard your family and your farm business in the event one of these “dreadful Ds” rears its ugly head?
Tom Haarmann, Money Concepts financial services manager with Carolina Farm Credit in the Statesville office, has worked with farm families the past 20 years providing financial management advice, including the considerations needed in estate planning to protect your assets and your farm. Drawing on his background as an attorney (though he no longer practices law), Haarmann says there are a number of tools families can consider when looking at how to develop a transition plan.
“The first thing is to recognize that life happens. Farm families are not immune. All the dreadful Ds – disability or dismemberment, discouragement, disagreements, death, divorce – are out there,” Haarmann says. “Start with a general outline of what you want for the family farm business in the event any of these things happen. How do you want to address them? What’s the overriding goal? Do you want to keep the farm going? Do you want to transition it to sons or daughters? Do you have an exit strategy that may be different? Do you plan to sell the farm at some point? Are there partners involved?”
Haarmann says that once you have a crucial conversation with your family and maybe a trusted advisor, you need to list your goals. What do you want long-term? When you can answer those questions, it’s time to consider the resources you may need to put a viable, legal plan in place. That will likely include an estate attorney who is well versed in estate planning laws. It may also include a CPA, financial planner, and an insurance representative. If the farm assets and family relationships are complicated, a mediator may be required.
“By nature, a lot of us are very private about our finances, especially with something so near and dear to us like a farm,” says Haarmann. “Farming is not just an occupation; it’s a way of life so these decisions can be difficult but it’s never too soon to have them.”
Haarmann has seen plenty of horror stories play out with farm families, some who have lost farms due to a farm accident killing the main bread winner and leaving a mountain a debt with no life insurance policy to cover it, resulting in the loss of a farm at a tragic time for the family. That’s why he urges families to start the important conversation and to schedule time to put a plan in place.
A number of tools are available, depending on what a family wishes, and a good estate attorney can share options. Here are a few examples:
For more information, see parts 1 of this three parts series! Stay tuned for part 3!
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