planning for the future of your farm; estate planning; transition planning; farm transition; farm succession
Although farm transition planning often focuses on passing assets smoothly from one generation to the next, in some cases, it may be preferable to skip a generation and distribute assets to the following generation. A Generation Skipping Trust (GST) is an estate planning tool that allows a farm owner to do so. A GST is a concept applied in a trust rather than a specific type of legal instrument or document, and it can be used to designate that certain assets will transfer to the grandchildren's generation, while providing financial benefits from the trust to the children's generation during the children's lifetimes.
Our new bulletin is part of the Planning for the Future of Your Farm series and is entitled Using Generation Skipping Trusts to Transfer Farm Assets. This bulletin explains how a GST works, examines what types of farm assets might be best for a GST, how using GST as a tool might affect your federal estate tax exemption, and how different GST provisions can be used to accomodate the needs of multiple generations of a farm family.
Please check out our new bulletin now available on the Farm Office website, or by clicking here.
Farming takes planning. A lot of planning. Whether for next year’s crop, expanding a herd, buying land, constructing buildings, starting a new venture, or upgrading equipment, farmers are nearly always engaged in planning for how to keep the farm on track. But farm transition and estate planning—that is, planning for what happens to a farm business and its family from one generation to the next—is a whole different kind of planning. And it’s one type of planning farmers often avoid.
Farm transition and estate planning can be challenging and uncomfortable, perhaps because it involves dealing with death, uncertainty, and difficult family decisions. But like planning for the next year of production, farm transition and estate planning is critical to a farm’s success. With good planning, a farm family can protect farm assets, implement family and business goals, and ensure a smooth transition of a viable operation to the next generation. It’s the kind of planning that can pay off big. That's why we've written the Planning for the Future of Your Farm law bulletin series, a resource that explains the legal tools and strategies that can address a family’s goals.
The ten-part series of bulletins in Planning for the Future of Your Farm includes:
- Farm Transition Planning: What it is and What to Expect. The concept of farm transition planning, common terms, what farmers can expect from the transition planning process, and how to prepare for it.
- The Financial Power of Attorney. A Financial Power of Attorney authorizes someone to make financial decisions for another. We explain the different types and how they can help a farm business.
- The Health Care Power of Attorney and Advance Directives. Medical and end-of-life plans can ease decision making uncertainties for families. This bulletin explains the Health Care Power of Attorney, Living Wills, Donor Registries, and Funeral Directives.
- Wills and Will-based Plans. A will is a commonly known tool for distributing property. This bulletin explains different types of wills and how they can be used in a farm transition plan.
- Legal Tools for Avoiding Probate. We review legal tools that transfer assets upon death and avoid probate, including beneficiary designations, payable on death accounts, transfer on death designations, and survivorship deeds.
- Gifting Assets Prior to Death. Gifting is one way to transfer assets to the next generation. In this bulletin, we discuss how gifting works and when it can be advantageous to incorporate gifting into a transition plan.
- Using Trusts in Farm Transition Planning. Trusts are popular tools in farm transition planning. In this bulletin, we explain how trusts function and highlight how they can meet family and farm planning needs.
- Using Business Entities in Farm Transition Planning. Many farms have business entities for liability or tax purposes, but business entities can also enable transition of a business to the next generation. We explain how in this law bulletin.
- Strategies for Treating Heirs Equitably. Whether heirs should inherit assets equally or equitably is a challenging dilemma for parents. We present strategies for equitable distributions of assets in this bulletin.
- Strategies for Transferring Equipment and Livestock. Equipment and livestock can be more difficult to transfer than other assets. In this bulletin, we review special considerations and strategies that can help minimize the challenges of these transfers.
Find the entire set of bulletins on the Farm Office website law library at go.osu.edu/farmplanning. We also cover these topics in our popular Planning for the Future of Your Farm Workshop, offered online and in person each winter. The next online workshop will begin January 23, 2023--check our Events Page at farmoffice.osu.edu for workshop registration details. Reading our new bulletins and attending our workshop are two first steps that can help you plan for the future of your farm.
This resource is provided with generous funding from USDA National Agricultural Library, in partnership with the National Agricultural Law Center.
