When parents have built a business and raised a family under the umbrella of that enterprise, they often expect that their children will want to follow in their footsteps. This, however, is often not a dream that becomes realized, as adult children tend to have their own ideas about how to chart their course within the world. For farm families in New Jersey, this can be especially true, as choosing an agrarian life is not something that everyone desires or is equipped to handle. When considering how to pass along an asset as complicated as a family farm, a complex estate plan is often required.
The first, and often the most difficult, step is determining which family members will be included as heirs. In cases in which none of the children or grandchildren have an interest in running the farm, this process may be simplified. However, if one or more heirs would like to keep the farm up and running, things become far more complicated. It is possible to construct a plan that allows one or more heirs to retain ownership of the farm, while the others receive either a greater share of other assets or the right to have their shares of the farm “bought out” by the retaining heirs.
When working through these decisions, it is necessary to discuss the matter in depth with all members of the family. Giving everyone the opportunity to understand how the family farm will be handled upon a parent’s death is important. Not only will it give everyone a fair idea of what to expect, it can also go a long way toward reducing division and contention between heirs when the time comes to put the plan into motion.
Addressing a farm within a complex estate plan can be a challenging task. Farm owners in New Jersey and elsewhere would be well-served to meet with an attorney to discuss the pros and cons of various options before determining a path. As with any other estate planning topic, deciding on a course of action well in advance of need is important, and can preserve the value of the assets under consideration.
Source: farmandranchguide.com, “Follow the three elements of any good farm estate plan”, Dec. 26, 2014