Transferring the assets associated with a family farm at your death often requires an especially unique estate plan. With proper estate planning, you may be able to reduce or eliminate estate taxes, avoid probate, and address potential liquidity issues. First, it is a good idea for Wisconsin family farmers to begin transferring the operating assets of the farm as soon as all parties involved are comfortable with the process. Farmers may also transfer their assets more easily by forming a business organization such as a limited liability company. Such an organizational structure also has the potential to ensure a smoother transition by allowing you to separate farm ownership and management.
Careful estate planning can also lower the taxes your loved ones will be required to pay upon your death. While you are living, you may make qualified transfers to your spouse and charities, and give up to $13,000 tax-free each year to anyone you choose. It is important to note that gift transfers made during your lifetime will also transfer your tax basis. If the property is later sold, the recipient will owe taxes on the appreciated value. If a transfer is instead made after your death, the tax basis will become the fair market value of the property. Consequently, it is a good idea to thoroughly consider the tax implications for any property transfer you may choose to make.
Before transferring any assets, however, it is a good idea for any farmer to first consider funding his or her own retirement needs. Farming families in particular should consider potential liquidity issues, as farms are often cash-poor despite ownership of many assets. This situation can make an equitable division amongst children and other family members more difficult. Parents with non-farming children that will be included in the estate plan should also consider diversifying their assets prior to death. Additionally, if a particular family member is more involved in the farming operation than others, it is important to consider whether that sweat equity will play a factor in how assets are divided upon your death. If assets will be distributed in a unique way, you may want to communicate your wishes to your family prior to your death in order to maintain family relationships.
Proper estate planning can make asset and farm management transitions flow more smoothly. Estate planning tools like a living trust can help you avoid probate, avoid guardianship if disability arises, name a guardian or guardians for your minor children, and name a personal representative who will administer your estate according to your wishes. By working with a skilled Wisconsin estate planning lawyer, you may also be able to defer income taxes on retirement accounts and make the transition for your loved ones easier following your death.
Contact Daniel J. Krause for all of your estate planning needs. Mr. Krause is an experienced Wisconsin living trusts attorney. He is available to help you transfer your assets and create a comprehensive estate plan that will protect the financial interests of your loved ones. To schedule a estate planning consultation, call the Krause Law Office LLC at (608) 268-5751. You may also contact Mr. Krause through the law firm’s website.
The Probate Process in Wisconsin, Wisconsin Probate & Estate Planning Lawyer Blog, April 25, 2012
Celebrities Highlight the Need to Prepare Your Wisconsin Estate Planning Documents, Wisconsin Probate & Estate Planning Lawyer Blog, April 23, 2012
Estate planning lays framework for smooth transition, by Jane Fyksen, Agri-view