Managing your estate is not always an easy process. Trying to please everyone and not create hard feelings is tough. However, when you need to divide the family farm in your estate, things can escalate quickly if your heirs do not agree with your decision. You can make sure your Arkansas farm stays operational long after you are gone by making smart decisions when it comes to your estate planning.
According to Farm Progress, there is no one right plan that works in all cases, but if you consider all the different aspects of your farm business, it can make things easier. You also need to build in flexibility for future changes and needs. Also, keep in mind that if you have some heirs that farm and some that do not, it could create extra tension and issues, so you need to ensure a fair split, which may not mean an equal split.
A trust or LLC are the most common ways to divide a family farm. The LLC is probably the better option if you want to ensure the farm stay in operation and provides for your heirs who are farming and wish to continue to farm. It also reduces tax liability and provides the flexibility your heirs will probably need in the future. It sets the farm up in a business-like manner, making it easier for your heirs to manage once you are gone and ensures non-farming heirs stay active and involved.
It makes decision making in the future easier. However, it can pose issues when figuring pay for the farming heirs. Additionally, if you give equal ownership or shares to each heir regardless of farming status, it may create serious problems for the farming heirs when it comes to making decisions about the farm.
An LLC does allow you to dictate many things about the farm. You can state whether your heirs can sell the land. You can issue shares or ownership percentages. It also allows you to avoid future issues by dividing the farm based on actual hands-on involvement with farming to give your farming heirs more control and to ensure they can live off farming. This information is for education. It is not legal advice.