Among the many decisions farmers and landowners make, the most important deal with estate planning. Unfortunately, estate planning often gets pushed to the back burner, and the wide array of options available to landowners is left unexplored. Being proactive in exploring these options can pave the way for a peaceful estate settlement that retains and passes on the assets in a mutually satisfying way for all involved parties.
Among the many estate planning options available to landowners is a trust. Trusts are an estate management tool that offer landowners flexibility and lots of customizable options. Ironically, the trust is also the least utilized estate management tool.
A trust is an artificial entity, created by means of a legal document, consisting of four basic elements: the trustee, the trust property, the trust document, and the trust beneficiaries. A trust allows a third party to hold assets on behalf of a beneficiary. The trust document specifies the rules of operation for the trust, the powers of the trustee, the beneficiaries to share in the income and principal from the trust, and instructions for distribution of the trust property.
How do you know if a trust is the right option for you and your land? The answer depends on a variety of factors, but as a landowner, you are already a good candidate, as trusts are ideal for those whose assets are largely in land. In addition, a trust might be a good fit for you if you meet one of the following conditions:
1) You want to leave your estate to your heirs in a way that is not directly and immediately payable to them upon your death. For example, you may want to stipulate that they receive their inheritance in three parts, or upon certain conditions being met, such as graduating from college;
2) You want to support your surviving spouse, but also want to ensure that the principal or remainder of your estate goes to your chosen heirs (e.g., your children from a first marriage) after your spouse dies;
3) You and your spouse want to maximize your estate-tax exemptions;
4) You have a disabled relative whom you would like to provide for without disqualifying him or her from Medicaid or other government assistance.
You may be asking why a trust is that different from a will. One difference is that assets may be gained sooner by beneficiaries, and that estate taxes may be significantly less or avoided altogether, depending upon the type of trust that is set up. Other benefits of establishing a trust include retaining control over your wealth, protecting your legacy, and retaining privacy by avoiding a public probate, saving costs and taxes along the way.
There are many types of trusts, and if you are considering one for your business assets and family, it’s important to discuss your options at length with an experienced attorney and estate planner before setting one up.
You’ve worked hard to get where you are – protect those assets for the next generation. If you are interested in exploring the estate planning options available to you, feel free to contact one of the experienced land managers at UFARM to help guide you.
United Farm and Ranch Management (UFARM) is a Nebraska-based company devoted to meeting landowners’ needs. UFARM offers a full range of Nebraska land management services, including real estate sales, rural property appraisals, consultations and crop insurance. UFARM has operated in Nebraska since the early 1930’s.
“Estate Planning: Is a Trust Beneficial?” CNN Money. CNN.com. Web. 10 Jul. 2014.
Leibold, Kelvin, and Melissa O’Rourke. “Trusts as an Estate Management Tool.” Iowa State University Extension and Outreach. Iowa State University. May 2014. Web. 10 Jul. 2014.
“What is a Trust?” Fidelity Investments. Fidelity. Web. 10 Jul. 2014.