Family-owned businesses, farms, ranches, and land holdings are often the most important and valuable asset of a family’s legacy. Sadly, less than 30% of family businesses survive the transition to the next generation – a problem that is sometimes but not always caused by estate taxes. More often businesses fail after the founders die due to issues not related to taxes.
Rather, our firm has found from working with many farm and family-owned business owners that family business succession planning—assuring the farm or business stays in the family while also being fair to the non-farming or non-business children—is the toughest challenge.
Estate Planning Solutions
Your farm or business poses two unique estate planning challenges that other people do not have:
- How can you preserve it so that you can pass it on intact to the next generation, without risking its forced sale or outside ownership coming in?
- How will you distribute it fairly among your heirs? Fair does not necessarily mean equal, which can result in some heirs receiving less than others.
Achieving these two goals means planning in advance for such expenses as estate taxes, as well as implementing strategies that give you maximum control over how, when, and to whom ownership of your farm transfers. Also, protecting the “farming” or “business” children, and still be fair to the other children.
Our firm has developed the Legacy Land Trust™ and the Legacy Business Trust™ that allow you to achieve all these goals. Contact our office for more information about your options.
Land Rich, Cash Poor
The typical farm family is land rich, cash poor. With thousands – and sometimes, millions – of dollars locked up in equipment, livestock, structures and land, a farmer’s net worth may seem impressive. But a farm’s actual cash flow tells an entirely different story.
Estate taxes will be based on the current market value of all your assets. If your heirs can’t readily come up with the cash from other sources, they may have no recourse but to sell the farm just to pay estate taxes and other settlement costs. Getting professional help with estate planning can provide strategies to minimize this burden and protect your heirs’ inheritance.
Sound estate planning, especially the Legacy Land Trust™/Legacy Business Trust™, can help. Special Use Valuation can also be relied on to reduce taxation. Specially designed Limited Liability Companies and Family Limited Partnerships, with a gifting plan, can reduce estate taxation and still allow the business or farm founder to maintain operating control Also be sure to read more about Business Planning and Asset Protection strategies here.
Zimmer Law Firm – Business Planning Attorneys in Cincinnati OH