Life and Estate Planning for Success

Written by Michael Baron on . Posted in General Estate Planning

Dear Michael: We are in between parents in that we have some older children – not interested in farming – and we have some younger children of which one or two might be interested in farming. They are still in middle school, however, so it’s hard to say what direction they may go. We don’t have a will, at this point in time, as we kind of thought we knew how life was going to go, but the older children surprised us by not farming. The younger children are much more involved in FFA and other agriculture pursuits than the older ones ever were. Where do we go from here when we have such young children? – Not Quite Old Enough

Dear Not Quite Old Enough: You have a situation that’s been repeating in cycles over and over again since farming began. If times were bad in farming as your children reached their formative years – ages twelve through sixteen – then these children were exposed to a less than positive attitude in your household, they tend to grow out of farming. If things were positive in your home regarding farming during these years, children of those ages tend to have a more positive outlook on being involved in farming. That’s just life.

In any case, you, as parents, have to determine if you want your younger children raised in the same area as your farm. As such, when you are writing your will for the first time, you’ll have to give much thought to ‘who’ will be the right person or persons to be the physical guardians of your children – if both of you should die.

Ideally, you’d like to name someone who lives close by, who has an agricultural background, and who not only loves kids, but wants to keep your children involved in your own farm – if possible – or in farming as a way of life even though they may not be close to your own farm.

The second part is to put into your will a financial guardian for your children. You’re going to name someone whom you trust implicitly in all financial affairs, as likely this person or persons will have carte blanche access to your assets after your death. I think it’s a good idea to name two people as financial administrators (guardians) for your estate and for your children to provide checks and balances. There are no ‘trust police’ running around making certain trustees, guardians, etc. are spending the money the way they are supposed to.

Speaking of trusts, as long as you have minor children, you’re going to put a testamentary trust in your will to hold assets in the event of both of your deaths. A testamentary trust is a trust created by your will upon your death. It does not exist until you die. Upon your death, your personal representatives will have two things to deal with – your estates (which are a non-human entity subject to taxes, debts, etc. much like a corporation) and setting up this trust. This is simply done by applying for a tax ID number, setting up a checking account for the trust and waiting for the assets to arrive from the estate as they are settled.

You may have the same trustees as you do personal representatives, or they may be different people, if you so like. Some people are closer to the situation in helping settle an estate (P.R’s), but not people you’d like to handle assets long-term (trustees).

Now comes the interesting part – classifying your assets and deciding which are going to be sold (converted to money) and which assets you’d like to hold long-term. If you have young children interested in farming, then likely you’d like to hold your farmland in trust until they reach an age (perhaps 30) to determine whether one or more wants to farm.

If they do want to farm, we have to give instructions via your will to trustees and guardians about how this happens, when it happens, what the other non-farming children will receive vs. the farming child(ren), etc.

Some real time and thought goes into this process but this not only clarifies what your ‘estate plan’ is going to be, it oftentimes clarifies what your ‘life plan’ is going to be with your children. Without such planning, we know for certain your farm and your agri-business will not survive you. That’s too bad because you’ve done a pretty good job of growing it – it’d be a shame to see it go down.

“Keeping the Family Farm in the Family”

Great Plains Diversified Services, Inc. 1424 W. Century Ave., Suite 208, Bismarck, ND 58503-0917 Telephone: 701-255-4079
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Michael Baron is not an attorney. Information given through written, verbal, or electronic means by Michael Baron or Great Plains Diversified Services, Inc. is not to be construed as legal advice. An attorney, tax advisor, or other registered advisor is needed for the completion of the estate planning process. An attorney must be consulted for legal advice and the drafting of legal documents.