Making a plan for passing on the family farm
Panelists at the Agweek Farm Show shed light on succession planning along with financial and tax management strategies.
ROCHESTER, Minn. — Planning ahead when it comes to farm succession can save future headaches when the time finally comes.
Myron Friesen is the owner of Farm Financial Strategies in Osage, Iowa. He writes about estate and succession planning in a column that runs every other week in Agweek, called Succession Success.
Friesen said the primary focus of their business is to work with farm families who want to transition their farm from one generation to the next. He said there's generally two issues that they deal with.
"One of them is are there going to be any tax issues," said Freisen. "And the second is, how do we do this equitably to our children and accomplish our goals of maybe keeping the farm and the family or being fair to everyone."
On the tax side, there's a difference between federal estate tax and state estate tax that property owners looking to transition the land need to be aware of, said Friesen.
"On the federal estate tax side of things, currently, we have a federal estate tax limit of $12.92 million per person, or almost $26 million per couple," said Freisen. "Generally, that covers the vast majority of the farm families out there."
For states like Minnesota or Illinois that have a state estate tax, those issues have to be addressed, said Freisen.
"Because a lot of those limits are lower than the federal limit," he said.
Jason Wagner of Wagner Oehler Ltd. Law Firm, said that estate planning is something that can't be done in reverse.
"By definition, if we don't have it in place when we need it, it's too late," said Wagner. "A lot of times we think I want to make sure that we're doing it the right way, I want to get it perfect. Well, there is no perfect. So we have to remember that we're taking it from something that could potentially be a disaster to something that we can live with."
If no estate planning is done, everything will be divided up in equal shares, said Wagner.
"And if you've got a farm successor, that can be a disaster for them," he said.