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Montana Ag: Seminar prepares producers for estate planning

Montana Ag Network graphic updated
Posted at 7:42 PM, Oct 16, 2022
and last updated 2022-10-17 10:55:41-04

Estate planning is something that many people know they have to plan, but they don't begin taking action until later on in life.

For family-owned farms and ranches, it's become an increasing issue. According to the U.S. Department of Agriculture's National Agricultural Statistics Service (NASS), family-owned farms account for 97 percent of the 2.1 million farms in the U.S., but only 30 percent of those farms survive into the second generation, and 12 percent operating by the third.

There may be various reasons farms and ranches have a difficult time surviving, but one primary reason is due to the fact there is a lack of survival plan.

Despite the lack of planning, the issue has become a normalized topic.

A Farm and Ranch Seminar was hosted in Lewistown by the Pathwise Group in collaboration with JCCS and the law firm of Scott Tokerud, and McCarty.

Pathwise Group founder Jared Brown explained, "It seems like it's become more of a topic of conversation that people would be looking for resources in the Farm and Ranch environment. I think Covid caused people to consider things outside of their control happening, and then secondly, the demographic people are just getting a little older as far as the ones that run the operations. Then you're bringing children that are much more aware of estate planning and they're kind of wanting their parents and the operation to go through a process, so they can plan accordingly. A lot of kids are wanting to move back and get into the environment and the industry. In the last few years, we've seen an uptick in that. So, I think they are really pushing their parents to get something done on the estate planning side."

Since the beginning of the pandemic, the number of 18-34 year-olds with estate planning documents has increased by 50%, yet an estimated 1 in 3 Americans who have no will or living trust claim they don’t have enough assets to leave behind.

Brown said the planning process should be treated in two different ways: It should be run like a business, as well as a personal situation.

Brown said, "Sometimes, we see several different corporations layered in there, and then they have the personal scenario. We need to look at how to protect them personally and what they need to do, but also, they have a business, so what's the transition plan? What is the estate equalization between the children, which are going to be employees or owners as well? So really, estate planning from a farm and ranch component is much more around separating, but personal and business, and then making sure that you're planning accordingly to protect what's important to you and make sure things go the way you want them to do down the road."

Keith Tokerud said one of the mistakes people make when estate planning is waiting too long.

"By the time people are married, they should be thinking about estate planning, nothing else, to designate guardians for their kids. Then when you get older and you have more assets and you want to protect those assets for your spouse and for your kids, that's a good time to plan. And then if you get into your sixties and you don't have any planning, I don't like the odds of something bad happening and your family being really savvy to a train wreck. there's no magic age to do it, but certainly, to me, if you haven't done it into your sixties, now it's time to really get serious.

Tokerud added, "one of the reasons we are trying to do estate planning is avoid disputes among the family. I think mom and dad do the initial planning themselves, and they share with the people that ought to know, which are generally the kids. It's not for the kids to tell mom and dad what to do, but once mom and dad have some planning in place, it's fine to get some input from the kids, and certainly explain to the kids why mom and dad have done certain things. For instance, in Montana, a lot of farmers and ranchers do not have enough assets besides the farm to treat all non-farm kids equally. They want to keep the farm in the family. That means we have to give more to the farmer. If that's not explained to the non-farm kids before mom and dad are gone, it can cause a lot of heartache and unhappiness amongst the family members. Communication is big amongst family members.

If you are a farmer or rancher looking to plan your estate, you can always schedule appointments to set you up: