Texas farmers and ranchers often pass down their land and occupation to their children. This is their legacy. However, protecting the family legacy to ensure that you are making the most of it takes planning.
An economic development consultant says, “When it comes to planning versus no plan, it’s an easy decision.” He also points out that you have two choices: either you decide what happens to your children’s legacy or the court decides.
Divvying up farm or ranch property for your children is usually more complicated than just drafting a will. Sometimes there is one child who is more interested in working a farm and continuing the legacy than another child. You may want to gift some of the farm or assets to them while you are still alive. At some point, one generation may want to retire from maintaining the farm and start the next generation on another path.
One way of dividing up a farm or ranch business to pass it along to heirs while you are still living is to set up the family business as a legal entity like an LLC. This way, you can divide it up by shares. Whoever owns over 50 percent (51 percent or more) of the shares is in control of the entity, so if you want to remain the controller, limit the shares you portion out. Your shares can then be willed to whomever you want to take over after your death.
The economic development consultant also recommends good communication between family members and getting advice from outside trusted parties. You want to be as fair as possible to your heirs if you intend to keep harmony in the family. Discuss your estate planning and wills regularly with your legal and financial advisors to see if changes are in order. In addition, don’t neglect to determine the tax implications before embarking on any legacy estate planning decisions.
Source:Agri-View, “Legacy planning addresses family issues, even health care” No author given, Mar. 31, 2014
