It’s Planning Season
To have a successful farm, thoughtful planning must be done every season. Your life is no different. To properly prepare for the next season in your life and the lives of your loved ones, you need a well-executed estate plan. When crafting a foundational plan to protect yourself, your loved ones, your business, and your legacy, consider the following estate planning tools.
Estate Planning Tools to Consider
1. Revocable living trust. A revocable living trust is an estate planning tool in which a trustee is appointed to manage the accounts and property that you transfer to the trust for the benefit of one or more beneficiaries. To fund the trust, you change the ownership of your accounts and property to your name as the trustee of the trust. Typically, you serve as the initial trustee while you are alive and well, and you are also the primary beneficiary. If you become incapacitated (unable to manage your affairs), the backup trustee steps in and manages the trust for your benefit with little interruption and less potential for costly court involvement. Upon your death, the backup trustee manages and distributes the money and property according to your instructions in the trust document, again, usually without court involvement. Because the accounts and property are deemed to be owned by the trust and you have already determined what will happen to them, probate is not needed. A specifically crafted trust has the additional benefit of protecting your precious asset (the farm) from your beneficiaries’ creditors.
IMPORTANT:Work with an experienced estate planning attorney to ensure that any trust created and funded with farming assets (real estate, equipment, etc.) is structured in a way that does not disqualify you from or reduce any government farming subsidies you could be receiving.
2. Financial power of attorney. A financial power of attorney is a written document in which you appoint a person to handle various financial and property transactions on your behalf when you are alive but cannot handle them yourself. This can include signing contracts for you, making deposits into your bank account, managing property, paying taxes, and opening new accounts for you. The specific powers granted to an agent under a power of attorney will depend upon your wishes and what you list in the document itself. Also, depending on your state law, you may be able to dictate when your chosen agent can step in and act on your behalf. If your land, equipment, and associated bank accounts are in your name only, it is incredibly important to have this tool in place so someone has the authority to maintain your business and associated transactions should you be unable to.
3. Medical power of attorney. Farming can be a very strenuous career. Having a medical power of attorney in place is, therefore, crucial. This document allows you to name an individual to make medical decisions on your behalf in the event you cannot. While this power is applicable only if you are incapacitated or otherwise unable to communicate your own wishes, it will save your family a great deal of time and money by avoiding the court process of having a judge appoint someone to make decisions for you.
4. More-advanced estate planning tools. Depending on the value of everything you own (including your farming operation), you may need to include more-advanced tools in your estate plan. We can craft a plan that may reduce the amount of state or federal estate tax owed at your death, offer additional liability protections, or provide liquidity to address your unique situation.
At McDonald Law Firm, we understand how important your farm and family are to you. We want to help ensure that you are properly protected and that everything is in place to properly transition your farming legacy to the next generation. Call Andre O. McDonald, a knowledgeable Howard County, Montgomery County and District of Columbia estate planning, special-needs planning and Medicaid planning attorney, at (443) 741-1088; (301) 941-7809 or (202) 640-2133 to schedule an appointment so he can evaluate your unique situation and craft a plan to help ensure that your legacy will be a lasting one.
DISCLAIMER: THE INFORMATION POSTED ON THIS BLOG IS INTENDED FOR EDUCATIONAL PURPOSES ONLY AND IS NOT INTENDED TO CONVEY LEGAL, INSURANCE OR TAX ADVICE.
