Does your family own a farm? Have you or your family members built a business? If so, you want that farm or your family’s company to be handed down to the next generation. Unfortunately, laws on estate taxes and on the transfer of property after death can make the transition process more complicated than it needs to be. Aside from the complexities, there are also serious financial consequences that could be associated with an asset transfer.
You need to ensure you have done everything possible to protect your family owned farm and the company you and your loved ones have created. This means choosing a legal representative with experience, with knowledge of estate planning laws, and with the commitment to offering clients the strongest advocacy possible. Legacy Care Law Firm provides assistance to those with family owned companies and farms in the Greater Merrimack Valley region and in Southern New Hampshire. Our attorneys can offer advice on how to protect your family farm or company and can answer questions including:
- Why do I need to take steps to protect a family owned business or farm?
- What steps can I take to facilitate the easy and effective transfer of a family owned farm or business?
Why Do I Need to Take Steps to Protect a Family Owned Business or Farm?
If you do not take active steps to ensure that your family owned company or your farm is transferred as quickly and effectively as possible to the new owner, your business and assets could be adversely affected. Some of the possible consequences of failure to plan in advance for those who own farms or family businesses include:
- Loss of business value or loss of value of the farm if assets are not managed properly during the transition period. If you have created a will but not engaged in more substantial estate planning, the executor of the estate that you named in your will should manage your farm or business after your death. An executor may not always be able to act with the same level of competence as an owner. Further, uncertainty in company operations could cause a loss of trust on the part of shareholders, customers, or co-partners.
- An interruption in normal business operations during the period in which a company transitions.
- The assessment of estate taxes, which can sometimes result in beneficiaries needing to take on loans or which could result in farmland or company assets being sold to pay the Internal Revenue Service.
- Loss of ownership or control over the farm or business if your heirs who inherit end up getting divorced or bankrupt.
These consequences are among the many undesirable results which could occur if you have not made an advanced plan to protect the land or company that should stay within your family for generations.
What Steps Should Be Part of Your Plan for Your Business or Family Farm?
The goal of planning for your business or for your family farm is to make sure these important assets are managed properly at all times and to make sure that those who stand to inherit will be able to do so quickly so they can take over operations.
Depending upon the value of your business or farm as well as depending upon many other factors such as how ownership is structured, some of the different steps which should be a part of your plan could include:
- Structuring business ownership as a corporation so the company can continue after you are gone and so you can ensure the company has a separate legal identity outside of your own.
- Exploring options for reducing or avoiding estate taxes, which are assessed on estates over $5.45 million as of 2016. Farmland and business assets can quickly exceed this amount, which means a loss of value as money is paid to the federal government.
- Developing a plan for incapacity, such as the creation of a living trust, to ensure that the business or farm is managed appropriately in the event of incapacity.
- Utilizing trusts to facilitate the timely transfer of assets to inheritors.
- Creating a buy/sell agreement with co-owners of a business to ensure all parties understand rights, obligations, and limitations after death or disability
Legacy Care Law Firm can help you to take these steps and to use other legal tools necessary to facilitate the ongoing operations and seamless transfer of your family farm or business after death or in cases of incapacity.