As a parent, thorough estate planning is important as you strive to meet the needs of your children in as fair a manner as possible once you are gone. Even though it may be difficult to think about your incapacity and end of life, engaging in difficult conversations with your children can help them prepare for the inevitable in more ways than one.
It can be helpful to involve your adult children in your estate planning process. Especially when matters surrounding a family farm are at stake, a lack of communication in your planning could become costly and complex for your children after you have passed.
What do you need to discuss with your children?
Many farms are multi-generational. If you farmed your land with your parents and hope your children will follow suit, there are many things you would be wise to consider as you look to the future.
Conversations you have with your children might include:
- Do your children want the farm? Although it might be heartbreaking to consider, perhaps your children have moved out of South Dakota and established careers of their own. Even if they want to keep the farm in the family, maintaining its day-to-day operations might not be their reality.
- Is there a way to leave your land to your children but allow someone else to farm it? It might be possible to keep the farm in your family even if your children will not be handling the daily operations. Running a farm requires hard work, business savvy and vast knowledge related to both your animals and the land use. Willingness to consider land rental agreements could possibly be a way to leave the farm as an inheritance to your children without overwhelming them.
- Can your children get along while managing the farm? Leaving your property, and your family business, to siblings could become tricky. One child might want to live on the land more than another. Or perhaps one is more interested in the financial aspect of the property at stake. In some instances, it might be better to transfer ownership of your property to a trust you establish for your children.
You likely have many options for leaving an inheritance. When you consider everything at stake on your farm, you can probably see how planning for your land, operations, and equipment as thoroughly as possible could help prevent tax problems or probate disputes for your children after you are gone.