Estate planning can differ wildly according to each person’s unique needs and desires. For example, New Jersey farmers may run into special problems when attempting to leave the family farm behind. In fact, any kind of inheritance can have special considerations, but many of these problems can be mitigated, if not eliminated, with proper estate planning.
Concerning farms, great difficulty arises with trying to bequeath it to the next generation, and this difficulty only increases as time goes on. This may be due to several reasons, most of which involve conflict between family members.
One roadblock many individuals run into when trying to create an estate plan is that most people want to make sure each of their children is treated equitably, which means dividing the assets of the estate in equal proportion. For a farm or other large piece of property, the land may be apportioned equally to each child, or each child may be given their own share in the overall operation.
Unfortunately, such a set-up may well spell doom for the family farm. Not each child may be interested in owning a piece of the farm, creating friction between all of the beneficiaries.
Or, it may well be that there is a significant disagreement on the direction of the farm. Sometimes, one child may wish to redevelop the farm into a real estate development while another may wish to keep it as-is, particularly if he or she has been involved in the operation of the farm.
Through proper estate planning, though, it may be possible to avoid conflict and to ensure that one’s wishes are abided by the heirs.
Some estate planning experts suggest taking the “separate but equal” approach when dealing with large amount of property. In the case of a farm, one suggestion is that if there is a child who has been actively involved in the operation, that they receive the farm as an inheritance. Any other children could then be named as a beneficiary of an equal value life insurance policy.
It is important to look critically at the needs, desires and capabilities of each heir before making any estate planning decisions. Once all options are considered, it is important to communicate any decisions with all heirs so they can understand the reasoning behind the choices.
Source: Hoosier Ag Today, “Avoiding Family Farm Conflict,” Larry W. Dykes, April 27, 2012