Among the top three reasons for an estate plan are to make sure that your assets are distributed according to your wishes, helping your loved ones from having to pay more taxes than necessary and if possible, avoiding having your estate go through probate.
When there are minor children or family members with special needs, it’s critical to have an estate plan, advises the Capital Press in the article, “Ag Finance: Why you need to do estate planning.”
While it’s likely that most adult children can work things out, even if it’s costly and time-consuming in probate, minor young children need protection. Wills are frequently written, so the estate goes to the child when he reaches age 18. However, few teens can manage big property at that age. A trust can help, by directing that the property will be held for him by a trustee or executor until a set age, like 25 or 30.
Probate is the default process to administer an estate after someone’s death, when a will or other documents are presented in court and an executor is appointed to manage it. It also gives creditors a chance to present claims for money owed to them. Distribution of assets will occur only after all proper notices have been issued and all outstanding bills have been paid.
Probate can be expensive. However, wise estate planning can help most families avoid this and ensure the transition of wealth and property in a smooth manner. Talk to an experienced estate planning attorney about establishing a trust. A living trust can be amended or revoked at any time, if circumstances change.
As an example, farmers can name themselves as the beneficiaries of a trust during their lifetime and instruct to whom it will pass after their death. The title of the farm is transferred to the trust with the farm’s former owner as trustee. With a trust, it makes it easier to avoid probate because nothing’s in his name and the property can transition to the beneficiaries without having to go to court. Living trusts also help in the event of incapacity or a disease, like Alzheimer’s, to avoid conservatorship (guardianship of an adult who loses capacity). It can also help to decrease capital gains taxes, since the property transfers before their death.
Distributing an estate that has an abundance of land, but not necessarily liquid assets, requires the experience of an estate planning attorney who routinely works with farm families. When some children work on the farm and others do not, it can become a bit tricky. An experienced estate planning attorney can help you and your family work through the process to ensure that your heirs are treated fairly.
Reference: Capital Press (December 20, 2018) “Ag Finance: Why you need to do estate planning”