Daunting is one way estate planning has been described. This is one reason South Dakota farm families have avoided implementing a plan for their farms and families.
Break down the process
The big thing to remember about estate planning is that it is a process, it is more marathon than sprint, and each family needs to work at it and be committed to its creation to ensure a written plan is in place when it is needed.
The process can be broken into five steps:
- Initiate the discussion
- Develop your objectives
- Compile your information
- Seek professional advice
- Keep things updated
Initiate the discussion
Communication will be the lead component to successful estate and transition plans, if you are thinking of returning the next generation to the farm. Bringing up hard topics about death, transferring assets, economics, balance sheets, income and expenses and other topics are easy to avoid amid day to day discussions about crops and/or cattle.
Opening the door to these topics can lead to the prevention of future problems and disagreement amongst surviving heirs. When everyone is aware of the plan and the reasons behind the decisions were made a smooth transition to the next generation can occur. This process may also help solve current problems that had not been discussed among all members of the family. These can cause discontentment about job duties and responsibility to changes that could be implemented on the farm.
Holding a meeting to inform all family members about the goals of the plan may be one way to provide a platform to present your ideas for the farm and family. This can also be a time for everyone involved to express feelings and expectations about the plan. At this time listen to any potential concerns or problems the family may have with what will be implemented and when. Assumptions are the worst enemy of a family estate plan, and can lead to many problems.
While communication is a critical component to establishing a plan, it is also important to keep respect in mind as well. Parents are opening up about hard decisions and big plans related to the assets they have acquired through their own inheritance and/or hard work. Coupling the goals they have for the farm and family is not an easy task. Both on-farm and off-farm children have had many new experiences and responsibilities since high school and/or college graduation, and need to utilize those experiences to ensure the goals of the family and farm are met. At the end of the day the farm is still under the ownership of the senior generation and they can do with it, what they want. Allowing the children to express their opinion and ideas should be respected.
List your objectives
Just like a high school basketball team setting a goal of getting to the state tournament and then creating objectives to get there, the family and farm needs to have clear goals for the future. The article Estate Planning, More than Tax Planning discusses the creation of goals for the farm and family further in depth. The goals and objectives for the farm and family are the directions the estate professionals will use to ensure the correct tools are implemented for each family.
Compile your information
Information is king, and as it relates to your estate plan, having all of your personal and business information compiled and organized will save time and money. Since all assets need to be included in the written plan, a list of land, machinery, stocks, retirement accounts, bank accounts, etc., as well as a list of liens, mortgages and other liabilities needs to be compiled. If you are missing any legal documents replacements can generally be found (Replacing Legal and Financial Documents in South Dakota).
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