Attendees at a farm show in neighboring Minnesota heard important information about the special types of estate planning available for farmers to facilitate transferring family farms to future generations in the most advantageous way possible. Family farm owners here in Wisconsin face very similar concerns and challenges. Proper estate planning can provide key benefits not only to allow you to transfer your family farm to your loved ones, but also place them in the best position to keep the farm in the family for many generations to come.
One of the primary challenges faced by family farmers is that they may own a farm worth millions of dollars in land and equipment, but still be “cash poor.” This can present a challenge when the farmer dies, as it may trigger an estate tax debt. With proper planning, you may be able to defray or eliminate that tax obligation. This can be accomplished through a variety of techniques, including qualified transfers, gifting strategies or trusts, such as irrevocable life insurance trusts (ILITs).
One of the essential benefits of planning is the protection it affords family farmers. Many family farmers run their operations as sole proprietorship businesses. That means that all the farmer’s wealth is potentially at risk. Someone injured in a car accident could attack the farm’s assets as part of collecting on a judgment awarded to that person. Similarly, but in reverse, a disgruntled farm worker could, if successful in court, pursue the farmer’s personal assets in order to collect.