Summary Whether you own a small retail or service business, or you are a family farmer, your business is an important part of your life and wealth. Chances are, you have taken steps during your lifetime to protect your business and ensure its longevity. You have probably also taken steps to protect your family during your lifetime. A proper estate plan can include provisions that will ensure that your business or farm’s continuity will be appropriately provided for, and that your loved ones will receive what you intend in accordance with your wishes.
A court case from “across the pond”
serves as an example and a useful reminder of just how important proper and
complete planning is, especially when you own a business or a farm. In the case
from England, the husband was part of a family farming operation. The family
had created a business entity (in this case, a partnership) for the business.
The farmer’s wife believed that the partnership owned the farming business but
that the farmland itself was owned by the husband individually.
The husband died in 2005. He had created
a will before he died. His will said that the farmland was to be distributed
into a trust that was to benefit the wife. Eventually, though, the wife
discovered sometime after her husband’s death that the farmland was 100% owned
by the partnership. This meant that the husband individually owned none of the
farmland, which meant that his provision in the will funding his farmland into
the trust was meaningless and the trust received nothing in terms of land.
The case even ended up in the British
courts. While the law of the United Kingdom has its differences from the laws
of the U.S. states, the facts that led to this unfortunate farmer’s wife’s
problems and subsequent trip to the courthouse could just as easily have been
something that happened here in the States.
Business entities can be very useful
tools within an overall business plan for your family farm. Establishing a
partnership, corporation, LLC or other entity can offer substantial advantages
to you and your family (and your farming business) when it comes tax planning, asset
protection and reduction of liability exposure, or other objectives.
When you decide to create such legal
structures, though, it is important to make sure that they are properly
incorporated into your estate plan. If you own your interest in your farm as a
member of an LLC, for example, it is essential to make sure that your estate
plan includes instructions for distributing your ownership stake in the LLC to
whomever you want to receive your interest in the farm. It is also important to
make sure that you understand clearly “who owns what,” so that you can make
certain that your estate plan functions properly. An estate plan that
distributes land will not work if it turns out that your LLC, and not you, own
that farmland.
If your estate planning goals have led
to establishing a living trust, it is important to make sure that your trust is
properly funded. This could include funding your ownership interest in your
farm’s business entity into your trust. In other words, for example, you may
need to create documentation that transfers legal ownership of your stake of
your farming LLC from you as an individual to you as the trustee of your living
trust.
While this may all sound very technical,
what you should take away is just how important it is, when you plan your
estate, to make sure that everything is coordinated to work together. It is
just as important to make sure that you review and update your plan – your
whole plan – to make sure that it is still constructed to give you and your
family the maximum benefit and the maximum realization of your goals. Your
experienced estate planning attorney can help you with making the best choices
for you and your family.
This article is published by the Legacy Assurance Plan and is intended for general informational purposes only. Some information may not apply to your situation. It does not, nor is it intended, to constitute legal advice. You should consult with an attorney regarding any specific questions about probate, living probate or other estate planning matters. Legacy Assurance Plan is an estate planning services-company and is not a lawyer or law firm and is not engaged in the practice of law. For more information about this and other estate planning matters visit our website at www.legacyassuranceplan.com.
This article is published by the Legacy Assurance Plan and is intended for general informational purposes only. Some information may not apply to your situation. It does not, nor is it intended, to constitute legal advice. You should consult with an attorney regarding any specific questions about probate, living probate or other estate planning matters. Legacy Assurance Plan is an estate planning services-company and is not a lawyer or law firm and is not engaged in the practice of law. For more information about this and other estate planning matters visit our website at www.legacyassuranceplan.com.
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