Estate plan, life plan frequently develop together

Dear Michael: We are in-between parents in that we have some older children not interested in farming and some younger children who might be. They are still in middle school, however, so it’s hard to say what direction they might go. We don’t have a will at this point as we kind of thought we knew how life was going to go, but the older children surprised us by not farming. The younger children are much more involved in FFA and other agricultural pursuits than the older ones ever were. Where do we go from here when we have such young children? – Not Quite Old Enough

Dear Not Quite Old Enough: You have a situation that’s been repeating in cycles ever since farming began. If times were bad in farming as your children reached their formative years – ages 12 through 16 – then they were exposed to a less than positive attitude in your household and tend to grow out of farming. If things were positive in your home regarding farming during these years, children of those ages tend to have a more positive outlook on being involved in farming. That’s just life.

In any case, you, as parents, have to determine whether you want your younger children raised in the same area as your farm. As such, when you are writing your will for the first time, you will have to give much thought to who will be the right person or persons to be the physical guardians of your children if both of you should die.

Ideally, you’d like to name someone who lives close by, has an agricultural background and not only loves kids but wants to keep your children involved in your own farm – if possible – or in farming as a way of life even though they might not be close to your own farm.

The second part is to put into your will a financial guardian for your children. You’re going to name someone whom you trust implicitly in all financial affairs, as this person probably will have carte blanche access to your assets after your death. I think it’s a good idea to name two people as financial administrators (guardians) for your estate and for your children to provide checks and balances. There are no “trust police” running around making certain that trustees, guardians, etc., are spending the money the way they are supposed to.

Speaking of trusts, as long as you have minor children, you’re going to put a testamentary trust in your will to hold assets in the event of both of your deaths. A testamentary trust is a trust created by your will upon your death. It does not exist until you die. Upon your death, your personal representatives will have two things to deal with – your estates (which are a nonhuman entity subject to taxes, debts, etc., much like a corporation) and setting up this trust. This is simply done by applying for a tax ID number, setting up a checking account for the trust and waiting for the assets to arrive from the estate as they are settled.

You might have the same trustees as you do personal representatives, or they might be different people, if you so like.

Now comes the interesting part – classifying your assets and deciding which will be sold (converted to money) and which you’d like to hold long-term. If you have young children interested in farming, you’d probably like to hold your farmland in trust until they reach an age (perhaps 30) to determine whether any of them want to farm.

If they do want to farm, you have to give instructions via your will to trustees and guardians about how this happens, when it happens, what the nonfarming children will receive vs. the farming children, etc.

Some real time and thought goes into this process, but this not only clarifies what your estate plan is going to be, it often clarifies what your life plan will be with your children.

Without such planning, we know for certain that your farm and your agri-business will not survive you. That’s too bad because you’ve done a good job of growing it, and it would be a shame to see it go down.

Source: http://www.tristateneighbor.com/entertainment/country_living/your_money/estate-plan-life-plan-frequently-develop-together/article_3fde4386-dc21-11e6-9106-3bc9758b267f.html

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