More Thoughts to Ponder When Forming a Distribution Plan for Your Ohio Farm
December 15th, 2014
Estate Planning Attorney Ted Gudorf explains the fundamentals of forming a distribution plan for an Ohio farm at a filled-to-capacity farm planning seminar.
First off, compile a list of debts and assets, personal and business, that could be relevant to the process. These might include your mortgages, business loans, crops, livestock, farm vehicles, real property, etc.
Next, remember that creating an "equitable" plan is not the same as creating an "equal" one.
It’s one thing to take what's in a savings account and divide it up into three or four even amounts (assuming you have three or four children). It’s quite another to figure out a way to divide five horses, seven tractors, several metric tons of corn, and a sizable head of cattle “evenly” among your heirs. Even if all of your children contributed equally to the farm, the simple math does not work in your favor, unless you're prepared to mimic King Solomon's strategy of metaphorically "cutting the baby in half" to ensure evenness.
However, you can still create an equitable solution, even if it’s not technically even.
For instance, maybe the children who play an active role in the farm could inherit the useful farm equipment and property, while your passive children could inherit money from your savings or checking account. Game out various contingencies. What if your spouse dies before you? What if you die first? Should your spouse take over the business, or should it fall to your oldest child, who has already been de-facto running the farm anyway?
Your farm might also owe money to creditors or to federal and state tax authorities. The strategic use of LLCs and life insurance policies and trusts can shield the estate from being raided by creditors and create a pool of cash to handle debts.
Contingencies like these abound; considering them all in detail can give you peace of mind.
You also need to work through the plan, share it with appropriate people, and make sure it's easily accessible, so that your heirs will know what to do, if you get sick or if an emergency strikes the farm or your household. When you run a business like a farm, even a few weeks of “organizational chaos” can create tens of thousands of dollars' worth of damage, lost crops, unhappy employees, and legal problems. So you really need to be organized.
Gudorf Law Group, LLC can help you handle the entire distribution planning process, so that you feel in control of your farm's destiny and comfortable that you've addressed all possible contingency outcomes. Please call us at 1-877-483-6730 right now to set up a confidential time to talk with our team about your Ohio farm estate planning needs.