Ensuring the details of your will match your farm business plan is an important step that can save survivors stress and money. Inconsistencies could lead to tax and estate distribution costs and harm the longevity of the farm itself.
Critical communications
Pivotal to keeping details consistent in transition planning is openness and communication, says Joel Bokenfohr, an FCC Business Advisor. Problems can arise when one of the groups involved doesn’t share their expectations, requirements and other considerations with those participating in the process.
The outgoing generation, for example, might plan to evenly split a farm property between multiple children. However, if one child is significantly more involved in the farm than their siblings, they may expect to receive a larger share of the farm operations. If the will and the business plan differ, it could be a startling discovery.
“We still see instances where someone wants to avoid the will discussion and wants to take a simpler approach by making everything equal,” Bokenfohr says. “If it’s not communicated, the next generation is making future business plans of their own, and now they’re in a position where they have to rebuy the farm or assets.”
Unexpectedly leaving everything to one child is equally problematic if the plan hasn’t been communicated. Doing so leaves family members in an uncomfortable — and potentially confrontational — position, wondering why the choice was made. Even if you decide to leave everything to one person to keep the farm business viable, you lose the opportunity to get everyone on board if you don’t discuss it first.
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