A farmer may love the farm and love the work but that doesn't mean that all the children will. This can create an estate planning challenge.
People who own a farm may find they face a difficult challenge when they approach estate planning and attempt to keep the farm in the family as well as treat all children equally. These goals can be difficult to accomplish because the overwhelming largest portion of the estate is often tied up in farm assets, such as land and equipment.
This can be even more difficult when one child is currently participating in the farm operations and another child is expected to join later. Recently, Delta Farm Press discussed one possible solution to the problem in "2 separate entities enhance farm succession plan."
The idea is to split the farm into two separate corporate entities. One entity holds title to the land while the other entity owns the farm equipment and operates the farm. The second entity leases the land from the first entity.
Buy/sell agreements are put in place as a way to make sure that the entities remain in the family.
An estate plan then gives the children shares of these corporate entities instead of the physical property. A child who wants to continue farming would then have the option of purchasing the shares of a child who is not interested in being a farmer.
Many other solutions exist that will preserve the family farm and treat everyone fairly. An estate planning attorneys can help guide you through the process.