Leading the Way
How leadership works on the ranch.
contributed article by B. Lynn Gordon Leader Consulting, Sioux Falls, S.D. leaderconsulting.biz
KEEPING THE FARM IN THE FAMILY PART TWO - THE INS & OUTS OF WILLS AND TRUSTS W
hat is important to you? What keeps you up at night? These are questions you may be asked when you begin the process of working with an estate planning team. Answering these questions will help to define and accomplish your farm/ ranch transition strategy goals.
November 2020
“Many folks come to me and say ‘I need a will’, but what they really need is to work through the estate planning process to determine what can work on a practical level to achieve the proper transfer of ownership and management of their farm, land, and other assets,” says Lindsay Harris, Harris Law & Co., Sioux Falls, S.D.
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do it.” Therefore, the management capacity of the next generation and your legacy goals can determine if your estate plan should center around a will or a trust.
WILLS A simple will allows you to:
“Wills used to be the gold standard and still are used for many individuals who don’t own any property or young families with the only goal to name guardians for their children,” says Harris. Wills are a start to the process, but like most starter homes, families tend to outgrow them.
• Name whom you want to
inherit your property. May also list who you want to serve as guardian of any minor children
• Name a custodian or trustee to
manage money and other property on behalf of any minor children
• Name an individual to be your
“Developing a good transition strategy avoids unnecessary transfers of income, gift, and estate taxes,” says Harris, “and ensures financial security and family harmony for all generations. Our farming families want more than a will, they want a plan that eliminates the chaos and gives their loved ones a roadmap to keep the farm in the family, whether or not they have an operator in the next generation.”
“The biggest misconception is people think a will is their only and best option,” says Harris. Yet, wills are required to go through the court-administered probate process, are expensive to administer for farming families, and do not generally provide instructions for the generations going forward.”
Heather Venenga-Whipple, a financial associate with Thrivent Financial, Watertown, S.D., agrees. “Sometimes there is someone who can step up to farm and sometimes you don’t have someone who can
“Wills and how the assets are going to be divided up are going to be public knowledge – they will be in the local paper, and many people don’t realize that when they choose a will,” says Venenga-Whipple.
personal representative or estate administrator
TRUSTS “One of the greatest issues we see is the lack of understanding about trusts and how they fit into the estate planning puzzle,” says Harris. “Trusts are like cars – there are many makes, models and features available. The right trust is one that you can understand, is easy to administer, and is customized to fit your family and your farm. Harris and Venenga-Whipple find trusts allow for a smoother transition for many families. Trusts are legal arrangements to help you accomplish a variety of goals from providing income for yourself and your survivors to passing on your interests to the next generation, reinforced the two succession planning professionals. In a trust, a grantor agrees to transfer assets to a trustee, who manages the assets according to
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