Family business owners, farmers, ranchers and property owners encounter distinctive obstacles when trying to protect their business or farm as a family legacy. Unfortunately, more than 70 percent of family businesses fail to make it to the second generation. Estate taxes contribute heavily to this outcome.
Beyond estate taxes, other costs also diminish what families can pass down. Probate expenses and various settlement fees can substantially reduce what owners leave behind. Additionally, determining how to divide these assets fairly among family members creates its own set of challenges.
HIGH ASSET VALUE, LIMITED CASH FLOW
Most farming families own valuable assets but have limited liquid funds. Their wealth sits in equipment, livestock, buildings and land, often worth hundreds of thousands or even millions of dollars. Yet their actual cash availability tells a different story.
Estate taxes calculate based on your assets’ current market values. When your family lacks ready access to cash from other sources, they might have to sell the farm simply to cover estate taxes and settlement expenses.
PLANNING STRATEGIES FOR YOUR ESTATE
Your farm or business presents two primary planning considerations:
- Finding ways to keep it whole so you can transfer it intact to your children
- Determining how to divide it fairly among family members
Meeting these objectives requires advance preparation for costs like estate taxes, along with putting strategies in place that allow you to control the timing and recipients of your farm’s ownership transfer. Reach out to our office to learn about available approaches.
You can also find additional information about Business Planning and Asset Protection strategies here.
