Estate planning for farm owners involves some unique issues which often revolve around making sure that a farm is properly passed down to a family’s next generation. It is important that the farm can be passed in an economical manner because farm families depend on the farm to generate revenue for living. If you require assistance with estate planning in the state of Minnesota that involves a farm, talk with an attorney who understands the business of farming as well as the principles that are followed by a large number of farmers. This article will review some of the estate planning techniques that a law firm can use to help farming families transfer ownership of a piece of property between generations.
Purchasing the Farm
After a person comes of retirement age, that person’s descendant can purchase his or her farm. Any proceeds from the sale of the farm can then be placed into the person’s estate plan to be distributed as that individual sees fit. The downside to this type of transfer is that sometimes these transfers can create capital gains for a person, which can result in a reduction of the person’s property value. For these exchanges to occur, the next generation must also possess a significant amount of capital to purchase the farm.
Purchasing the Farm After a Parent’s Death
Purchasing a farm after a parent dies is another common method of acquiring a farm. In these situations, capital gains are often eliminated, so there is not a reduction in a parent’s estate. The one downside is that fluctuations in property values often mean that a person is required to pay more for a farm after a parent’s death as opposed to after that parent retires. Some parents decide to pre-establishing a value for a piece of property. In some situations, parents also decide to acknowledge any equity that the next generation might have placed in the value of a farm.
Dividing the Farm
Parents sometimes decide to divide a farm and give either equal or unequal amounts to their children. In some situations, one member of the next generation might decide to rent the other areas of the farm from the siblings. To help assist the child who decides to rent the property in planning, parents often decide to establish the heir’s rental rates in connection to the average rental prices for the area. Additionally, these division plans should be as specific as possible.
Obtain the Services of a Minnesota Estate Planning Lawyer
Our law firm understands that farms are different from any other type of property. Farm clients have unique concerns that require the assistance of an attorney who understands their concerns and who can help create an estate plan that takes all their interests into consideration. Speak with attorney Steve Welle at O’Keeffe O’Brien Lyson Foss today at 701-235-8000 or 877-235-8002 to make sure that your estate plan takes all important issues into consideration.