At one time, a top concern for many farm owners was how to prevent losing the family farm to pay estate taxes upon the death of the owner. Today, with the higher than ever federal estate tax exemption, losing the farm as a result of estate taxes is usually not the biggest concern for keeping the farm in the family.
Instead, the biggest risk of losing a family farm is from matters such as a divorce, spousal elections at death (especially in cases involving a second marriage), and even a lawsuit against a person who has an interest in a farm (where an adverse judgement can lead to a forced sale of the farm to pay the judgment). Bankruptcy and creditor matters can similarly force the sale of a farm, even in situations in which the debt was incurred by a non-farming spouse.
In this article, I discuss these threats, and how effective estate planning using trusts, pre-nuptial agreements, buy-sell agreements, and other strategies can protect against the inadvertent loss of a chunk of the family farm. For farm owners interested in learning more about how to protect the family farm for future generations, I would invite you to attend the upcoming Top Producer Summit, which is being held at the Hilton Chicago Hotel on January 27-30, 2020. I will be speaking throughout the Summit about farm succession planning strategies, and a number of other leading speakers will cover topics such as grain marketing, risk management, technology trends, collaborative farming.