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estate planning

8 Estate Planning Tips

We recently met with a group of successful ranchers and farmers. As you can imagine, working the land is a very hands-on business, with active involvement by multiple members of the family. That is the case with the group we met.

Our purpose in meeting was to discuss succession planning, ensuring the hard work of each generation is protected and passed on to future generations at maximum value. We opened the conversation with a simple question – What did your parent’s do concerning estate and succession planning?

The replies were varied, but there was a consistent theme throughout – “As with working the farm, the results you get are a direct result of the effort you put in. It’s up to you.”

Everyone in the audience said the lesson from their parents was that with a proper estate plan in place, you control what happens to your legacy, your estate, and one’s life work.

Below are 8 common themes for estate planning that came out of our conversations.

A) Don’t procrastinate.

Ranchers and farmers don’t delay their responsibilities; they understand the cost efficiencies of timely actions, and the danger to crops if you put off necessary work. It is no different with an estate plan. Death is a certainty you have to plan for because you can’t anticipate when it will happen.

B) Build contingencies into your plan.

We don’t have a crystal ball, and there may be circumstances where we may not be able to speak for ourselves. Build options into your plan for these instances, such as a power of attorney or an assigned decision maker.

C) Talk to your family and communicate.

It’s important to share the essential design of your estate plan with your family. It’s the best way to eliminate conflict and hard feelings among family members. You manage expectations upfront.

D) Pitfalls of equal distributions.

Many estates in equal proportions to their heirs. In the farming & ranching business (or any business for that matter), this approach may not be the best solution. If an heir does not participate in a business but receives an equal share of that business, their motivations would be at odds with the heirs participating in the business. There are alternative ways through life insurance to distribute wealth to non-participating heirs without causing turmoil in the business once you are gone.

E) Update the plan on a regular basis.

Assets change. Strategies evolve. Family members change. Family dynamics get altered. Life goes on. All of these events can impact an estate plan. Schedule reviews and updates on a regular basis.

F) Evaluate assets and understand what the possible tax consequences.

Get a professional valuation of assets, and the tax implications when assets transfer at death. This includes federal estate taxes, state taxes, and the government’s perspective on valuing your assets and net worth.

G) Understand Liquidity requirements at death.

There’s always a cost to settle an estate, whether it’s probate or trust administration fees, funeral expenses, and/or final medical expenses. For farmers and ranchers, there is also the ongoing cost to keep the business in operation until the estate is settled. All of these require cash, and the estate plan needs to account for that cash, ensuring it is available when needed.

H) You’ve come this far!

Organize all the work and time invested in the plan. Leave well-organized records and documents, and a team of professionals in place to support the plan implementation. We recommend legal, accounting/tax, financial planning, life insurance, real estate, and farm management experts.

Comprehensive planning ensures the legacy of the Farm or Ranch continues. As one spouse said: “Our planning saved us money, and brought clarity to the family vision.”

If you have questions, would like to review your current plan, or want to start a legacy plan, please call us at Global Investment Strategies LLC. We’re here to help you and the generations to come. 520-360-8177 or dmcclure@glistrategies.com.