Winter Is the Perfect Time to Begin Estate Planning

 The daylight hours are short and you have probably seen your family members at one time or another during the holiday season.  What better time is there to begin the process of estate planning?  You have spent your entire life building your farm and acquiring your personal assets.  Now is the time to put effort into ensuring the future of your farm and your retirement are the way you envision it to be. 

 What will happen to my farm when I am gone?  Will my spouse be taken care of?  What about the house?  What about taxes?  These are all questions that need to be addressed.  A recent study from Iowa State University revealed 50% of farmers do not have a current estate plan in place and 71% of retiring farmers have not yet named a successor.  According to the U.S. Census, the average age of a farmer is 58 years old.  The average life expectancy for a male in the U.S. is 76 years and a female at 81 years.  Time is a precious commodity you may or may not have.

What is estate planning?  One text book definition of estate planning is the process of accumulation, management, conservation, and transfer of wealth considering legal, tax, and personal objectives.  The goal is to have both an effective and efficient transfer of assets.  An effective transfer means your assets are transferred to the person or institution to whom you intend for it to be transferred.  An efficient transfer means the costs associated with the transfer are minimized, consistent with the greatest assurance of effectiveness.  In short, you want your assets to go to whom you intend them to go, with as little expense as possible.

As a producer, what is the first step you can take to begin the process?  A family meeting is a good start.  Communication is one of the most important aspects of estate planning.  By effectively communicating with heirs or others involved with the operation, it ensures everyone has the same understanding, provides a goal of what you want the plan to accomplish, and eliminates assumptions and secrecy.  Here are a few tips to hold an effective family meeting:

  • Establish a specific time and place for the meeting to occur
  • Establish and stick to a time limit
  • Give everyone involved an equal opportunity to contribute without criticism
  • Don’t allow it to turn into a gripe session
  • Use good communication skills
  • Make it fun

         The goals of your estate plan should include:

  • Maintain income and financial security
  • Transfer assets to heirs as you wish
  • Minimize income and estate taxes
  • Minimize probate cost

Estate planning is not a solo venture. It will include several people to ensure it is done correctly, including your spouse, heirs, siblings, accountant, financial planner, banker, and an attorney who specializes in estate planning.  If you are ready to begin the process, contact your Extension ag business specialist for assistance.

Source: Doug Scotten, MU Extension Ag Business Specialist