Estate Plans are a Crucial Part of Farm/Ranch Succession Planning
Next week I will be speaking at a series of meetings sponsored by University of Idaho Extension on the topic of estate planning and succession planning for farmers and ranchers. Often, succession planning and estate planning are considered one in the same. In reality, while estate planning is one of the first issues to address, it is only a step in the overall process of succession planning. I define succession planning as the process of decision making that:
Protects the ongoing viability of the farm or ranch;
Provides for the orderly transition of the agricultural operation to new ownership; and
Preserves family harmony.
Estate planning is a crucial part of that succession plan and often I begin with the estate plan because death and incapacity are unpredictable. I don’t know when it will happen. If it happens before the farm or ranch transitions to the next generation, it can cause significant difficulties in completing the transitions. So, the estate plan becomes the backstop to make sure other succession planning actions can continue. As a result, the estate plan will need to be revisited and revised as succession plan evolves.When it comes to estate planning, there are three types of plans. The government plan, also known as intestacy, where the default rules established by your state legislature will control, and probate will be likely be required. A will based plan, where you can establish the rules, but will still likely involve the probate courts. Or, a trust based plan, where you can establish the rules, while at the same time avoiding probate. It is important to work through a process that includes estate planning as a vital component of your overall succession plan. This will allow the estate plan and the succession plan to be pointing toward the goals set forth above.