Every estate plan should cover three elements when it comes to farm estate planning – Who, What, and How?

The first element is the most basic: Who is going to receive your estate upon your death?

The second element gets a little more complex: What are your heirs going to do with your estate after they receive it?

The third element is perhaps the most important and often the most overlooked is: How do we protect the property until we die?  

Many people assume they've written a will or given instructions and this will cover the first element: Who will get their estate upon death.

The ‘Who’

The word 'who' has gotten to be a very complex word today, with children married, divorced, remarried, children, stepchildren, adopted children.

Classifying your heirs is an important step of deciding who will share in your estate upon your death. Today’s blended families provide a lot of interesting discussion as to who is included and who should not be included. Many people are horrified to find their children's ex-spouses can become heirs.

The worst thing you can do is not mention a legal heir to the estate. If you want someone specifically left out – mention them – and state you don't want them to receive anything plainly in your will. This may be, for example, ex-spouses and/or spouses or perhaps stepchildren of your children. Most wills are not written explicitly enough to exclude unwanted heirs.

The ‘What’

What are you going to put into your estate plan to make certain a child on the farm can continue to farm? What's going to stop a majority of the children selling the land off? What are the children supposed to do if there is a conflict between heirs? They need rules as to what's going to happen and how they'll get along with each other.

If you have a farming child and you don't have a very, very specific plan as to how the farm business will continue past your death, there is a sixty-seven percent chance the business will not survive. Include your farming child and other children in this process so they understand why things need to be written the way they are in your will.

Once everyone is on the same page, life goes a lot easier. Farming children know what to expect, non-farming children know what to expect – and they can settle differences while you are still alive.

People who don't have farming children still need a set of rules in the will for the children to abide by upon their death. You have to cover what happens when the children have joint ownership of a very expensive asset and how they can leave (or not leave) this joint ownership with their siblings. This occurrence is inevitable – it's not a question of “Will it happen?” The only question is, “What happens when it happens”. Have rules in your will as to 'what' happens.

The ‘How’

Last, but perhaps the most important, is 'how to protect the property until we die?'

Lifespans keep increasing, health care gets better, people are living longer – however, the living live with more and more risk of needing care.

The diseases and impairments that used to kill people now only disable them. Forty-three percent of all people will require long-term care. That's almost a four hundred percent increase in just the past twenty years.

Few people realize the costs of long-term care has risen dramatically. Care that cost an average of $3,000 month ten years ago are sometime now more than $10,000 a month. More serious cases – such as Alzheimer's, dementia, or stroke – can run $10- $15,000 per month!

In the meantime, government assistance and welfare programs have become more and more restrictive in paying for these costs. Medicare now determines that if the care given isn't 'restorative care' they will no longer pay for costs of care. Under this definition, if you're not being restored to your former self, Medicare isn't going to pay the costs of care.

Make certain your estate plan covers the who, the what and the how. If not, failing to plan for all three or forgetting any one of these is exposing your lifetime's work to chance.

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