Estate planning for farmers is uniquely complex – particularly when you have children and grandchildren whom you hope will continue the business you and possibly your parents and grandparents built. These days, however, there’s no guarantee that all of your kids will want to pursue this line of work. Even those who do may have very different ideas about how to run it.
Every family situation is unique. It’s crucial to decide what’s best for your family as you do your estate planning.
Why it may not be best to give everyone a share
Many people believe they need to leave each of their children a share of the business, even if they’re not involved in the day-to-day work. However, when one or more siblings is a “silent partner,” conflicts can break out. If you have children who aren’t interested in the farm, it may be best to give them their inheritance in money or other non-farm-related assets and leave the farm to those who can and want to run it.
Say you have a son and daughter, and both want to continue running the farm after you’re gone, but they’re both strong-willed and independent. You’re concerned about conflicts later that could destroy everything you’ve built.
Options for leaving the farm to multiple children
There are some options. One is to divide the parcels of land so that each can run theirs separately. This can also help them more easily leave their land to their children.
Another option is to create a new business entity (either a partnership or corporation) for the farm that allows buyout and rental options. That way you don’t have to worry about who’s getting the better parcels. In Minnesota, you have the option of a partnership or limited partnership if you go that route and a C corporation or S corporation if you choose that type of entity.
Whatever you decide to do, it requires a great deal of thought – not just on your part but on the part of the family members to whom you plan to leave your farm. Experienced legal guidance is essential.