Check out our Missouri Ruralist Web Exclusive video of Stephen Briggs, a St. Joseph attorney specializing in farm estate planning. Briggs says the biggest hurdle to successful farm succession is getting farmer clients in the office door. It's natural behavior to put off this important management step in farm businesses and, too often, farmers put it off until it's too late.
Even the longest journey starts with just one step, but the decision to make that first step can be difficult. That's particularly true for many farm families when it comes to estate planning, according to Briggs. He's the managing partner with the St. Joseph law firm of Morton, Reed, Counts & Briggs.
"Our firm has a long history of estate planning, with a variety of clients, mainly in the farming community, from Platte County to the Iowa line," he says. "Many of our clients have been reluctant to take the first step."
There's always something around the farm that seems more urgent than sitting down to do estate planning. But it's risky to put off this important job. "If you fail to take that first step, you risk having your children or other beneficiaries pay more in taxes, be tied up in probate court, or otherwise not have your wishes carried out if something were to happen to you," Briggs points out.
There are many options available to help farmers plan their estate. "One initial tool that everyone should consider is a durable power of attorney," he suggests. There are two types of durable powers of attorney.
One is for legal/financial affairs, and the other is for health care decisions. "The legal and financial power of attorney allows your named agent to perform any business or legal transaction in case you become incapacitated," Briggs notes.
Other tools involve beneficiary deeds, on the simple side, to trusts, on the more complex side. "Trusts afford us the opportunity to do planning that saves estate taxes, and provide for succession planning," he says. "Trusts allow the opportunity to split assets between children, according to whether they stayed on the farm, or moved to town."
Assets in trusts also stay out of probate, avoiding fees and costs associated with probate.
The 2010 Tax Relief Act, which was signed into law in late 2010, increased certain tax exemptions, but the law is only in force through 2012. Lawmakers will again be looking at various aspects of estate taxes, but you'll be well served to get started on planning today, rather than wait for Congress to act again.
"At the end of the day, make that first appointment with your estate planning professional," Briggs recommends. "Once that appointment is made, you will find that you do get your plan finished in a timely manner. You won't have to worry about what might happen to you tomorrow, because you have done your planning today."
Estate planning is a critical element to making farm transitions work. For more information on how a family dairy farm near Billngs, Mo., is being transferred to a young couple, read "Passing the Torch" and "How a non-family farm transition works," in the June issue of Missouri Ruralist.