Avoiding Probate: Two Commonly Overlooked Farm Assets

Avoiding probate should be a primary goal in nearly every estate plan. It reduces legal fees, shortens administration time, and prevents unnecessary disruption for heirs. For most assets, avoiding probate is straightforward. Bank accounts, life insurance, and retirement accounts can pass by beneficiary designation. Real estate can transfer through a transfer on death affidavit.

For farm families, however, two types of assets are often overlooked and end up forcing an estate into probate: trailers and cooperative ownership.

Trailers

Most farms own one or more trailers, and many of those trailers have titles. In Ohio, trailers with a gross vehicle weight rating over 4,000 pounds must be titled. Trailers under that weight are only registered. Because trailers are often viewed as farm equipment rather than vehicles, they are frequently left out of estate planning.

A trailer that is titled but has no transfer on death (TOD) beneficiary cannot transfer after death without probate. This is true even if the trailer does not have a license plate. If it has a title in the individual’s name and no beneficiary, probate will be required to transfer ownership.

Adding a beneficiary is simple. The owner can visit the title office and complete a TOD designation. The title office will provide the form, notarize signatures, and issue an updated title at the same appointment. The filing fee is minimal and is far less than the cost of probate.

Trailers held by a trust or business entity do not need TOD designations. Because the trust or entity does not die, those assets are not subject to probate.

Cooperative Ownership

Membership interests in agricultural cooperatives are also commonly overlooked. Many farmers hold shares, certificates, or patronage equities through grain or supply cooperatives. These interests are assets and must be transferred after death.

How a cooperative handles ownership at death depends on its bylaws. Some cooperatives allow transfer to a surviving spouse or child outside probate. Others require the owner to file a beneficiary form during life. Without planning, heirs may be unable to access the cooperative account until a probate estate is opened.

The solution is to contact each cooperative where membership is held and request its procedures for estate transfers. The cooperative can provide forms or instructions to ensure that ownership passes without probate. This is a routine issue for cooperatives and can usually be resolved with a single call.

Conclusion

When reviewing your estate plan, do not overlook titled trailers and cooperative ownership. Both assets are easy to plan around, but without attention they can delay the settlement of an estate and create unnecessary expense. A few small steps now will help your heirs avoid paying thousands of dollars in probate costs to transfer assets that may have modest value.

For more information on avoiding probate, see Legal Tools for Avoiding Probate available at farmoffice.osu.edu.