Dear Michael: We are young and have children who are not ready to farm. The oldest is just entering his teens and the other two are pre-teens. We hope and pray one of them will be interested in taking over our family farm operation, but you never know what the future will hold. The oldest is involved in showing livestock and is always eager to help with planting, spraying and other crop activities. What things should we be preparing for in our wills and in our planning to accommodate one of our children (or more) farming in the future when they are still this young? – Not Yet Ready.

Dear Not Ready: In your case, you need to do planning along various outcomes to your life.

One obvious outcome is the two of you will live into your eighties and nineties and the farm will progress as the future unfolds.

However, in estate planning, we plan for the worst and hope for the best. If something should happen to either one of you – or both if you – you need to have a plan in place for all worst case scenarios.

First, if something should happen to the main farmer – and not to sound sexist, but normally this is the husband – have you two talked about what life would be like if this happened?

Many questions need to be answered. Will the wife continue to live on the farm or will you move off of the farm if you don't have the labor to keep up with a farmyard? Will she continue to actively farm or will she rent the land to someone else? With custom farming or hired help, it's possible she can keep farming if she is so inclined – but few are 'so inclined'.  

If she is going to rent out the land, what is going to happen with the machinery? Will it be sold? Will it be kept if one of the children is old enough to determine they want to farm? How many years do you wait for the children to determine if they want to farm? Do you want your child(ren) to attend school before they return to the farm – and if so, what age can they look at taking on the machinery and working parts of the farm?   

To make certain your wife can stay on the family farm after your death you need to be sure to have enough credit life or term insurance so she is completely debt free upon your death. With machinery and other costs escalating quickly in the past five years, it's easy to 'get behind' on the correct amount of coverage you need. However, without this protection, Mom will be forced to sell farm assets to pay the debts owed – and that often signals the end of the farm operation.

If something should happen to the wife – what plans are in place to make certain the farm stays together? The biggest problem is women seldom remarry after a death of a spouse. Men, on the other hand, seldom stay single – especially with young children. Have you thought about putting Mom's half ownership into a trust so that a second marriage wouldn't prove disastrous to the family farm?

If both of you should die, how is the farm protected? Minor children cannot own land or other assets until they turn age sixteen. Who will be your financial guardian for the children? Who will be the physical guardian of the children? Often, it's a good idea to make these two separate entities – financial and physical guardian – as putting too much 'freedom' into the hands of one person or couple can be a disaster.

Have you set up a trust in your wills to provide if one the children wants to farm, then the other children will receive other assets? Do you have other assets to offset what the farming child will need to survive in the ag business? If you don't, you need to consider setting up a trust which will provide sufficient life insurance benefits to cover this necessity. Many people wait until they are in their sixties to do this – but it is so much more cost effective when you are young.

If you have a will whereby the farming child – as yet unknown – is going to rent or buy farmland and other assets from the non-farming child(ren), is it economically feasible for this child to farm?

Too many people wait until they are too old or physically unable to buy life insurance for thee necessities. If one approaches this problem when you are in your thirties and forties, the solutions are so much easier to acquire and pay for. Putting a little aside today yields big dividends in the future.

In the event later on, the child we think is going to farm doesn't and another one does, we can just change your will. If none of the children decide this is their life's work, then you can lower or eliminate the life insurance – although by this age, most people are old enough to know paying for life insurance is a heckuva deal if you start in your forties and they seldom drop their coverage later in life. I've never had an heir say 'Gee, that's too much money Dad and Mom left me'.

If you're in this age group, plan ahead, set up the right will and put some money aside for the inevitable day when you are not here anymore. One thing about life – no one gets out alive.

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