Running a successful agricultural enterprise is no small undertaking. Farmers are often at work from before the sunrise until well after it sets. They have to handle everything from dealing with animal incursions to working on malfunctioning equipment.
Even those who grew up on the farm and have worked the land their entire lives can have bad seasons or other challenges that may put the future of the farm at risk. The eventual death or retirement of the current owner of the farm is a serious concern that requires careful consideration.
The transfer of ownership and operations to the next generation can lead to disruptions and conflict that could endanger the farm. One of the ways that those running agricultural businesses protect the farmland they own and cultivate is by creating an estate plan that addresses the property. Specifically, they may need to establish a trust as a way of ensuring continued farm operations even after their passing.
How can a trust protect a farm?
Trusts can serve as the legal owner of farmland or a farming business. That arrangement can be beneficial for several reasons. Land held in a trust is often not vulnerable should one of the farm owners divorce. It also has protection and scenarios where individual owners may face lawsuits or debt collection efforts.
Trusts are particularly helpful when the current owner of the farm dies. The language of the trust can control what happens to the property after their passing. Using farmland to fund a trust can protect it from liquidation by beneficiaries who inherit the property. Trustors can prevent their beneficiaries or heirs from pursuing partition actions and splitting the farm into many separate parcels. They can provide clear instructions about the future of the farm operations and the land.
The trustee can manage key assets so that the parties inheriting or taking over the farm can focus on managing the transition and day-to-day operations. Trusts allow for intergenerational protection of farmland and can prove invaluable for those who want to pass a legacy of land ownership and agriculture to their beneficiaries.
Estate planning as a farm owner may also require succession planning that aims to cultivate the skills of those taking over farm operations in the future. Those who consider what may happen to their farm after their passing can help preserve their families’ agricultural legacy for years even after they are gone.