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Legal Protection For Farms, Ranches and Land

Succession planning for farmers and ranchers is important, but it’s also complicated. Land, equipment, equity, your own retirement — how do you even begin to think about handing your business over to the next generation? This comprehensive guide covers everything you need to know about succession planning for your family farm or ranch.

We know the risks our clients in agriculture assume. Weather, commodity pricing, the impact of government policies, as well as the impact of income and capital gains taxes have a huge impact on their livelihood. We also know that farming, ranching, and growing timber is much more than a livelihood — it is a way of life. For many of our clients, land represents a legacy that has been carefully assembled and nurtured over several generations. We know that preserving agriculture as a viable lifestyle option for younger generations is something that is important to our clients.

As you map out your succession plan goals, also consider what’s important to you. If your home has significant meaning to you and your family, you may want to keep it in the family. Likewise, there may be certain charities you’d like to donate assets to, or you might have stipulations on the how the land you’re passing on should be used. Ultimately, you must determine what you want for your legacy.

This will be your north star when you put your farm succession plan into motion.Every farm or ranch is different, and the transition to the next generation comes with different concerns. Much of this variation is based on the assets you have within your possession. Here’s what to consider as you review your current assets:

Machinery can be dealt with in many ways. It can be sold outright or in installments, or ownership can be transferred when machinery is traded. Each option has tax implications, so you’ll want to consult with your tax advisor.

Gifting machinery may help limit some income tax consequences, but could also result in a gift tax. Finally, machinery can be leased to your successor, but you will have to determine beforehand who will pay for repairs.

The good news is this: By taking a look at your assets long before you’re ready to transfer ownership of your farm or ranch, you’re giving yourself time to choose the best path for you and your family.


The King Ranch Story

At Stan Miller Law Group, we believe that land that is divided and distributed will be wasted, while land that is aggregated and managed will be preserved and inevitably grow in value over time. The wisdom of this core premise has proven true over and over again. Our clients do not want what they have struggled to build to be dissipated over the span of a few years. They want it preserved and protected into the future. One of the best and more famous examples of how land can be preserved productively over time is the example provided by the Kleberg family in Texas.

In 1914, rather than planning to divide their ranch among their heirs, they chose instead to organize the ranch into a corporate form. By doing so, they were able to pass stock in their corporation to heirs while preserving the ranching operation as one entity. This decision is why the King Ranch continues today, over 100 years later, as a viable business enterprise. It’s quite an interesting story:

King Ranch – The Legacy

There are even better strategies available today that can empower clients to preserve their valuable legacy and protect it from divorce and frivolous lawsuits as well as the inexperience and lack of skill of younger heirs. With the proper structures in place, farm, ranch, and timber land can be well protected and well-managed over time and provide a solid foundation of financial security for future generations.

Farm Program Payments

Farm Program Payments mean the difference between making money and losing money.

The benefit of these programs extends beyond program payments to ultimately include things like crop insurance. It is critical that estate planning and asset protection planning not conflict with the requirements to qualify for farm program benefits. While we do not practice agricultural law, we work closely with our colleagues in the agricultural law community in Arkansas to be certain that the planning we implement is fully coordinated with the structures that maximize farm program payments and other program benefits provided by the U.S. Department of Agriculture.

Call today to learn about the many ways we can help you.


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