2026 Farm Tax Essentials: Webinar #3

Hi there, my name is Katie Cowan. I am visiting professor of a law at Auburn University. Um I also do some work with the extension system um in the areas of estate planning and farm transition. Um I'm also a certified farm succession coordinator. Um, and today I want to talk to you all a little bit about some estate planning um, ideas and issues uh, that you should be thinking about as a farmer, rancher, rural land owner. Um, so let's get started. So, like I said, we're going to be talking about some estate planning basics that are centered around farming and agriculture and rural land. Um, if you have any questions or anything, want to discuss further, my email address is here at the bottom. Um, kew00005.edu or you can look me up on the Auburn website. I should pop up there. Um, so what are the things that you need to be aware of when it comes to planning the transfer from you running the farm to the next generation running the farm? Um, before we go any further, I need to give a little disclaimer. I am an attorney, but I am not your attorney. Um, I this presentation is meant for educational purposes only and should not be taken as legal advice. Um, if something comes up that you have a question about or you feel that you should talk to an attorney about, which I am actually going to encourage you to talk to an attorney about your estate plan later in the presentation, um, I encourage you to do that and find an attorney um, in your area that specializes in estate planning, a law, is aware of how farms work, that kind of thing. And we'll talk more about that a little later. Um but just have to give that disclaimer that this is not legal advice. Also um this is a general overview. Um we can't have any personal stories. Um there are general questions welcome. Um but if you need to ask something personal that should be done um outside of the group setting. So, like I said, if you want to email me or something like that, that's fine. But, uh, we want to protect your personal information. So, no identifying information or personal stories or things like that, just to protect your personal information. So, what is an estate plan? An estate plan is basically a collection of legal documents or instruments um that dictate how you want your stuff, your assets to be managed and how you want them passed down after your death. Um and I know death is a morbid, sad topic that nobody really wants to talk about. I like to think of it more as planning for the preservation of your legacy. You've worked hard. you put your blood, sweat, and tears on into building your farm and building the life and the family and legacy that you love here on Earth. And um we want to protect that when you go beyond here. Um, and an estate plan is a way to make that transition easier both in the context of your family and your loved ones left behind and also in the context of the business aspect of your farm. Um, also an estate plan is kind of like um you can think of it as an instruction manual for your end of life plans. um it is there to tell the people that you leave behind what you want done and how you want it done so that your wishes are made known and they they don't have to question you know what would grandpa would have wanted um that kind of thing. So who needs an estate plan? Um there's a big misconception that only extremely wealthy people or people who are on their deathbed very elderly need an estate plan. And that is simply not true. Um an unfortunate truth is that none of us really know how long we have on this earth. Um and also even if we live a 100red years from now um it's better to be prepared now uh when you are able to think clearly about things and communicate with your family. Uh because what you don't want to be doing is making your estate plan or your family have to be figuring it out when you become incapacitated or after your death. Um that's where it gets messy. Um so everyone can benefit from an estate plan really. Um because an estate plan can be tailored to suit the needs and goals of anyone. whatever your view for the future of your family or farm um your assets is you can write your estate plan to accommodate for that. Whereas if you don't have an estate plan the state decides for you under the law and we'll talk about that later as well. Um the goal of an estate plan is basically to ensure the orderly disposition of your property and management of your estate um according to your wishes and how you would like that to happen. For farm families, this is especially important uh because land is generally a big part of your estate is going to be a big part of your estate. Um and your business lifestyle, your family legacy is tied to the land. And there are some specific ways that land needs to be dealt with in the context of farming um and agriculture um when it comes to making an estate plan so that we don't cause pitfalls or unnecessary clouds on the title um which can happen if you don't plan it right or you don't have an estate plan. Um, so the three most common documents that you'll see in an estate plan, and in my opinion, every estate plan should have at least these documents. The first one is a will. Um, I'm sure everyone has heard of a will. It is that document um that you write who you want your stuff to go to. Basically, um, instructing how you want your estate to be managed when you die. This is this is the instruction manual part of your um estate plan. This is where you will appoint your executive, the person who will be managing your estate and who you want each of your assets to go to. Um so we'll talk more about wills in just a minute. But the second common document that you'll see in an estate plan is an advanced healthc care directive or in Alabama you'll also hear it called a living will. A living will is a document that directs medical decisions regarding end of life care, life sustaining care. Uh basically all it says is do you want to be put on life support or not? If if it comes to that um this document only goes into effect if you are incapacitated and you cannot make decisions for yourself. you can't communicate um yourself uh in cases like if you're in a coma or if you have advanced dementia or um Alzheimer's and you or you have a severe break from reality and you cannot you can no longer make competent decisions for yourself. You're incompetent or incapacitated. um that is when this document comes into play. Uh it is not in effect if you are aware and you are if you do have the capacity to make decisions yourself. Um and it's only in effect during life. Um for obvious reasons, you don't need it after that. Um so the next document that you will uh commonly see and you should see in most estate plans is a power of attorney. Um, a power of attorney is when you grant another person agency or the authority to make decisions for you in the event that you become incapacitated like we talked about in a coma, advanced dementia, Alzheimer's, you know, not not living in reality um or able to make decisions for yourself. Um, this document allows someone to step in and make decisions for financial things, legal things, other medical decisions other than um life support, um real property. If you if your property needs to be sold, you can designate someone uh to buy or sell property in your name with a power of attorney um and make other decisions in the event you become incapacitated. So, this just serves as a document to say if I am not able to do this myself, I appoint soand so to do it for me. Um and again, this document is only in effect when if you become incapacitated and during your life. when you die, it goes away. They no longer have the power to uh you know, have any control over your property or decisions or anything like that. Um, a note about wills. Alabama is pretty strict about their uh format of a will and what is a valid will and what is not valid under the law. Um, Alabama does not recognize holographic wills. holographic means that it's handwritten and unwitnessed. So in Alabama, um a will must be typewritten or typed out in black and white from a printer or typewriter, I guess. Um that could work. And it has to be signed by the testator, the person making the will, and also witnessed signed by two disinterested witnesses. Um there's a story that I heard from a case that we studied in law school um of a man that lived in somewhere in Canada um where they do recognize holographic wheels. He was in a tragic tractor accident and he knew he wasn't going to make it and so he scribbled his will into the hood of his tractor um and unfortunately died shortly thereafter from his injury. um his poor wife found him and found his will. And in Canada um they took the hood of that tractor to court and the court accepted it as a valid will and probated his estate based on the tractor hood will. Um that will not work in Alabama because he handwrote it first of all and there were not two witnesses to it. He did sign it, but he was missing the two other big things that Alabama required. So, in Alabama, they would not have recognized that as a a valid will. Um, and he would have his family, his estate would have had to go through a whole lot more um hearings and court time to validate that was actually his will. So, moral of that story is you want to get your will written before the tractor accident if you live in Alabama. Sorry, morbid estate planner joke there. Um, so those are the three things that you're almost always going to see, you always want in your estate plan. Those are the basics. You can do much more with an estate plan. Um, and that brings us to why do we need one? Um, we know we need one to direct, you know, who gets what, who's my executive, who's gonna actually do the job of distributing all this stuff and and making sure the ends are tied. But it's there's a lot more to it than that. Um, bottom line is you want to make sure your legacy and your wishes are carried out according to what you intend and what you want after your death. You want to make sure the property is distributed to the heirs you intend. I'm talking about property, real property and personal property. Um, you might want to provide for a spouse, a living spouse or minor children or um the provision can be for anybody. We'll talk about how that's different from dying without a will. Um, and also another important one is in your estate plan, you can appoint someone to be a guardian and caretaker of minor children if you happen to die before they reach the age of majority which is 19 in Alabama. Um, for me that's a very important a very important part of having an estate plan because if you don't appoint someone in your estate plan, if you don't have an estate plan, the state will appoint that person and that may not always be the person that you would choose to raise your children without you. Um, you can also uh plan for your the business continu continuity of your farm um farm transition. You know, who's going to take over management? What does that look like? Um, who is in charge of and owns the land? Um, who manages and owns the equipment, the tractors, the vehicles, things like that, the animals, what happens to them. You can plan for all of that in an estate plan. Um, and you can also, like we talked about, appoint an executive who's going to oversee and administrate your estate. Um, and like I said, if you don't have an estate plan, the court will appoint one and that might not be the person that you would have picked. Again, um, you can also plan for the manage management of debts. Um, creditors are always going to get their piece of the pie from an estate. However, if you have an estate plan, you can go ahead and and plan for that. You can plan to, you know, utilize certain money to pay off debt while also setting up structures to protect other assets for the benefit of your heirs and whoever you want to inher in inherit those assets. Um whereas if you don't have a plan then the creditors are probably just going to get first bite of the apple with no real organization and that is more likely to deplete the assets in your estate than if you have a plan set up to deal with the with the creditors um to protect your other heirs. Also, there are some consequences of intestasy or dying without a will. Um, you can structure your estate plan to reduce estate tax consequences. Um, you can utilize it to minimize potential conflicts among family and other heirs. So, we've all heard those horror stories about, you know, grandma dies and then aunts, uncles, cousins all descend on the house and there's a huge fight about who gets what. You know, I wanted grandma's china. I wanted grandpa's truck. You know, this is what she wanted. That's not what she wanted. And it, you know, we've all heard those stories. So putting it down in an estate plan in black and white can give your family that guide and to know these were your wishes. This is what you intended. So there's no real question about is this what grandma and grandpa wanted. Um also an estate plan is a good tool to keep your assets and your estate basically out of court. the more you can stay out of court, the cheaper it's going to be because there's not as many court fees. Um, and it will probably be over quicker. Um, the the probate of the of the estate will be over quicker. Um because you can set up different structures to avoid court like trusts or um payable on death designations um and passing assets in a different way than just leaving them uh to your heirs. Um, there are different ways you can do that to keep the court from having to do it for you, and that's what we want to do. Um, also a big benefit is to provide guidance and peace of mind for your loved ones during a time that's already filled with grief and confusion and high emotions. um and where if you don't have an estate plan, there's going to be differing opinions on what your intentions were. Um you know, it's hard for some people to deal with um death of loved ones. And you know, the last thing they want to be doing is sifting through paperwork and dealing with the legal side of it. Um, so if you have an estate plan, you can have that to-do list, that checklist of instructions to be done so that they don't have to worry about, oh, what do we do now? That answers that question. Also, um, having an estate plan can avoid creating heirs property, which is one of the pitfalls when it comes to land ownership and specifically a land, rural land. Um, and we'll talk about that in a little bit, why that's such a big problem. So, let's talk about the two different ways. We've we've touched on them, but there's two ways that property can transfer. It can transfer through intestasy, meaning without a will. If you don't make an estate plan, if you don't write a will, the state gets to decide where your stuff goes. Um, and that's really all they decide for you. uh the state is not going to take into account a farm transition plan. They're not going to take into account um you know what your intentions would have been um because if you don't have an estate plan, it's not formally written down anywhere and they don't know that that was your intention. So, they're going to do it based on a formula, which we'll talk about, uh, which is codified in Alabama law, and that's how everybody's estate transfers without if they don't have a will. Um, and it's based on the law generally looking to the closest relative um, inheriting the estate. And we'll we'll look at it in more detail in a minute. The other way that property can be um transferred, assets uh can be transferred is dying with a will. And we call that test date succession. If you die test date, that means you had a will at the time of your death. You had an estate plan in place. Um, if you do have an estate plan, your property, your assets and things will transfer according to the will. And in testasy law does not matter. It doesn't control if you have a will. Your will controls if you have a will. Um, and it it must be done based on what you wrote as your intentions in that will. So, this is how your stuff would transfer if you don't have a will in Alabama. Um, and the way that Alabama did this, the legislature, I'm sure, came up with, you know, what they thought most people would want. Um, and that's not always the case. Especially for farms, agriculture, it works a little differently. Um, and there are more things that we have to think about, which we'll talk about also a little later. So if there is no will and someone dies, their spouse survives them but they do not have any children or any surviving children and they do not have any surviving parents then the spouse inherits the entire estate. um if their spouse does not survive them or they're not married um but they have children then the children will inherit that estate and they will it will be split among them equally evenly and we'll talk about why that creates a problem uh when it comes to land that's where that heir's property comes from um if the person has a surviving spouse and children that were all children of that marriage um the spouse will inherit the first 50,000 of the estate plus half of the rest and then the children will inherit the remainder divided equally among them. Um if the deedent had a has a surviving spouse um and they had children but they also had children that were from outside that marriage. So if you got married, had kids, got divorced, remarried and had kids with someone else, um the spouse inherits half of the estate and then the children of that of the deedent inherit the remainder of the estate. Um a note here that if the deedent had adopted his stepkids, um they would be treated just like blood relatives. Alabama recognizes adopted children and treats them under the law exactly the same as biological children. Um so another scenario is if you have a surviving spouse, you don't have any children, um but your parents are surviving. Your spouse will inherit the first $100,000 of your estate plus half of the rest and then your parents will inherit the other half of the remainder of the estate. Um if there is no surviving spouse, there are no children, but the parents are surviving, um then the parents will inherit everything equally. Um and if there's no surviving spouse, no surviving children, and no surviving parents, the court will look to the next closest relative. They start with siblings, brothers and sisters. If there's no siblings, they'll look for grandparents. If there's no living grandparents, they'll look for aunts and uncles. If there are no living aunts and uncles, they'll even go out to cousins and second cousins, third cousins until they find a living relative, a living blood relative. If the deedent does not have any relatives any blood relatives in the state um the property the assets in the estate will es sheet to the state of Alabama as sheet means it will go to the state of Alabama will take it basically. Um, so that's that's another big reason why I think it's important to have an estate plan is in the event that there are no surviving um, relatives, I I can think of a lot more people that I would rather have my assets than the state. Um, another note here is that there is no provision for leaving stuff to people you're not related to. The the state doesn't take into account if you want to leave assets to a charity, which you can do in your estate plan. It does not take into account if you um if you want to set up a trust or an LLC, something like that. The state's not going to do that for you. you have to have an estate plan to do things like that. Um, so that's another benefit is you get to tailor how your estate plan works if you have one. If you don't, the state's just going to tell you how to do it. So that's how that works. Okay, so let's talk about that problem of heirs property that we talked about a minute ago. Um this happens when someone dies without an estate and has a piece of property, a land, a piece of land and it gets left to their children or their heirs equally. Um on the surface that sounds fair, right? But fair is not all equal is not always fair. So when land is left in common to multiple people that have been inherited from someone who died either without a will or if their will was improperly written or improperly probated. Um, this creates a clouded title situation where if there are multiple owners and no deed, no proper will to show ownership, um, it can cause a lot of issues with the land. Mostly this clouded title, um, heirs property, it means it's stuck in the estate basically. Um, and the one of the main problems is you can't use the land to its full potential because of the lack of documented ownership. Um, banks don't like to lend on heirs property. They won't lend on heirs property. You can't you cannot use heirs property as collateral because they don't know who they need to get to sign the mortgage to um, you know, in the event that there's a foreclosure. Um, who do they take the land from? you know, who is it? Who who's on the hook? Um, they can't prove who's the owner. Um, and you can't pledge a piece of land that's not yours. So, um, banks won't lend on it. It's hard to get a mortgage. It's hard to get financing on. Uh, even for like lines of credit and things like that. But I used to work at Farm Credit in compliance and um we did a lot of lines of credit with land as the um collateral that won't happen if it's if it's heir's property. Banks are not going to do that. Um also heirs property because of the lack of documented ownership or documentation of ownership, it fails to qualify for a lot of government aid programs um and things like that. There's also a big problem of vulnerability to partition sale. When land is owned as heir's property, you have a bunch of owners that have equal right to the property. So, it's not like a pie. You don't own a piece of the pie. You don't own a physical percentage of the land. You own the entire land. And your interest, say there's four brothers that own a piece of land. Um, they each own a 25% interest, but they all have the right to access, utilize, um, do whatever they want to on the whole piece of land. They all own it in its entirety. They also all owe equal responsibility to the land. Everybody is under the same responsibility to keep the taxes paid. everybody's under the same responsibility to um be financially and otherwise responsible for upkeep and things like that. Um also in that structure any owner has the right to parti petition the court to sell their share um or sell their sh has has the right to sell their share outright. Um so what can happen is if one of the owners uh goes to the court and said I want to sell this property. I want my cash out. Um you the family the owners have to go through a partition sale proceeding and um a lot of times uh this is how land gets sold out from underneath families. Uh there's another issue where investors um we call them predatory investors in the aair's property alliance um that works with this primarily with with heirs property issues. Um if a predatory investor can get a hold of a it can even be a really small interest. You know they find a cousin who moved out across the country. they maybe they don't even know that they own this piece of property or they really don't care. They'd rather just have the the money. Um they don't understand, you know, no sentimental ties, things like that. Um an investor can seek them out and buy their interest from them, then file since they are now the owner of that interest, then they can file for a partition sale action. Um and that is a real risk for any property that is owned in this heir's property structure. Um another similar situation is taxes. Uh it the more people you have um the more likely it is that you know we're going to get confused on whose responsibility is it to pay the taxes. um if your name's on the bill, you know, some counties might send you a reminder. Not all counties are that that good. Um so, uh if the tax bill goes unpaid, then tax leans can be put on the property and then if it doesn't get paid after there's a lean, um that can go to tax sale. Um and the family can lose the land that way. Um, and because of all of these other disadvantages, the value of an air of an heir's property is going to be lower than if it was in a clear title situation. Um, because you could lend on it, you could, you know, qualify for the government programs if you needed to. Um, so heir's property is a real problem, especially for farming families, which if you're utilizing the land for your livelihood, you really don't want it to just get sold out from underneath you. Um, so the best way to avoid creating heirs property is to plan it out in an estate plan. You want to avoid leaving land to all my children equally or all my heirs equally. Um, you'll also see the word purerpurpes that means to all my children e equally in Latin. And in law school, they teach you that this is like the default. This is, you know, what what everybody does. Um, I don't think that's correct. I I think that should change. Um, because of these issues that it creates. Um, and it it is more apparent. I won't say it's more prevalent because it's it's a nationwide urban rural issue. This can happen on any piece of property, but it's I feel like it's kind of a bigger problem when you have farmland because you're actively using that land as your business, as your livelihood. It has a big part in the family. Um I've never met a a farmer that doesn't consider the farm part of the family legacy. Um so main thing is to avoid leaving it to all your children, all your grandchild, all your heirs equally. Um instead pick the one person who you know wants to carry on the legacy, is going to be responsible enough to do that. Um you know that really wants to continue the farming business. And we'll talk about farm transition in a little while, but that will play in here as well. Um, some other things to think about to avoid creating heirs property and also to make sure a will gets probated as it is intended. This is not just for heir's property. When a family member passes away, you have to make sure to file their will for probate within 5 years of death. Um, if a will is not filed within 5 years of the deedent's death, then the state will consider it invalid. And if it's considered invalid, the state will pass according to those intestasy laws that we talked about um for people who don't have a will. So, you don't even have to be an heir or person with any kind of interest in the will to file it. Um, if you know somebody that's died and you know where the will is, go file it or find out who the executive is and and you know, file it. Cuz if you don't file it within 5 years, then Alabama is not going to recognize it as a valid will. Um, some tips on probate. Probate is the probate court is where you go to file your will. Um, and also who handles your will after death. Um, all wills in Alabama have to be filed at the probate office like we talked about within five years. Um, so that the court knows this estate is open and we are in the process of getting everything transferred to who it needs to go to. We're transferring ownerships, things like that. So, you're going to deal with a probate court no matter what. Um, but here's some tips to save fees and time in court um to and to avoid it where possible. So, you can use utilize some strategies to remove property from having to go through probate, which is um the court will inventory it, they will administer it, they will do the things to get it to who it needs to go to. um you can avoid that and and make sure that all the court basically has to do is say yes signed off that this has been done and move on. Um and that's going to save a lot of time and effort and court fees. Um so you can use joint teny with writer survivorship on a deed. This is going to avoid that situation where you have multiple owners that own it all equally. That's just going to keep getting handed down and they're going to be more and more owners because of the fractionated interest. We'll talk about those four brothers again that each owned 25%. you know, if if they each have three children and they their state their land gets transferred to all of their children, well, we now have lots more owners than we have and we have each one of them has a lot smaller interest. Um, so if you use right of survivorship, if you leave your land to someone, say, you know, I leave it to my daughter and my son with right of survivorship. Right of survivorship means that when one of them dies, their share doesn't go to their heirs, it goes to the other owner. So if son dies first, his share will just go to the daughter and the daughter will then own 100% of the property. This avoids that fractionated interest and it just becoming heirs property down the line. Also, and this happens automatically on death. Um, a deed will always trump a will. Keep that in mind. Um, payable on death designation. If you have bank accounts, um, savings accounts, things like that. um if you designate someone to to basically inherit the account um you can do this through the bank that will happen automatically and the court doesn't have to deal with it. So um POD designations are uh important. Join accounts if you have someone you know this is common with husband and wives um then the account you can designate the account to just go into the other person's name. Um and they will also have access to the account. Uh so a retirement plans designated beneficiary insurance has a designated beneficiary. These are all things that transfer outside of probate and the court doesn't have to deal with it. It just happens automatically. So, utilize these these structures. Um, other things that you can utilize to keep land and um assets from having to go through the probate court are utilizing business entities. So, if you set your farm business up as an LLC, for example, a limited liability corporation, that is not only a way to protect those business assets, um, separate them from your personal assets, so that creditors, if they sue your business, they can only get to the business assets if you have them in an LLC. They cannot get to your personal assets if they are not in the LLC. Um, so that's a big benefit of having an LLC. Um, it's not the perfect situation for all businesses, but that's a very common one that's used. Um, and if the assets are in the LLC, they no longer belong to the individual. So, they don't get inherited like the rest of the state. They stay the property of the LLC. Um, and so the only thing that needs to be dealt with in probate or inner will is who are the new who's the new manager? Who's going to take my place as a manager of the LLC or owner of the LLC? Um, instead of having to deal with the assets that are in the LLC individually. Um, trusts are another good tool that can fit a lot of foreign families um, intentions and goals. Uh you can create an intervivos trust which means it goes into effect during your life. Um and you can tailor a trust pretty much the way you want it. Um you can you can set up a trust for almost anything. Um within the confines of the law of course um it can also be used to transfer assets into the corpus of that of that trust where they won't have to go through probate court. Um, also testimentary trust. You can set up a trust to go into effect uh upon your death. You write this as part of your or you reference this in your will. Um, a trust is going to be a separate document with its own rules and things that it has to abide by. Um and in a trust you um appoint someone as a trustee to manage the property in there for the benefit of the beneficiaries. So if you want your you know we'll say sons and daughters to benefit or you know get a in an inheritance but uh the most common example is that you you know you don't trust the financial acuity of you know your youngest son or whatever. That's probably shouldn't say it that way but um he hasn't made the best financial decisions in his life. So, or or maybe he's only like 12 and you you know, you want to leave him something, but he's a little young to be managing that much money. Um or um you want to leave the land to your children, but they're minors. The um a minor in Alabama cannot actually inherit land without a guardian. So if you put it into a trust and you appoint someone as the trustee to manage that for them until either you know they reach the age of majority or they reach the age that you think that they'll be financially able or responsible enough to manage that. Um you can you can do any of those things. You can set up a trust for um special they're called special needs trusts. Um, I have a son that had some medical complications when he was born. Um, and we considered setting up a medical a special needs trust for um, in case we were not there to to give him the care he needs, we would put, you know, money in there to pay for his, you know, surgeries or feeding tube accessories that were, you know, to pay the insurance premiums that he would need. Um, he's fine now. We did not need any of that. So, praise the Lord. But um that's what it's for. Uh a lot a common situation is if you have a child or any heir any anyone you can set a a special needs trust up for anyone um that you you're taking care of you want to take care of um that may be incapacitated for life or you know they may not be able to work. Um, that's a good tool if you want to help them with their care. Um, without just handing a caretaker or them the money, uh, to do so or the assets to do so. Um, you can put it in the trust and designate how it should be managed um, according to, you know, what would be useful and proper. Um, so uh, that's just one example. You can set a trust up for many, many different things. Um, and property will transfer into that trust immediately upon your death if you set up a testimentary trust. Uh, it's immediate if it's an interview trust. Um, and that also removes it from having to go through probate because then it's in it's owned technically by that trust. The trust is the owner of that uh for the benefit of the beneficiaries. Um, so the probate court doesn't have to deal with it. It just it just happens automatically. So the these are some things that can be used within an estate plan to avoid probate and to kind of organize things in a better way than everything goes to my kids equally or everything, you know, it's cheating to the state in that situation. Um, and if you don't have an estate plan, this the state is not going to take any of this into account. They're not going to do this for you. This is you can only do this through an estate plan, any of these things. So, let's talk about what estate planning and farm transition means for farmers. When you're planning out your estate, it's important not just to think about the stuff because that's a lot of the times when you think of estate planning, you just think of, you know, who's going to get my china, who's going to get my jewelry, who's going to get, you know, the furniture in the house. That's that's a part of it, but it's um there's much more to it, especially when there's a farm involved. Um you want to take your future business goals, your future farm goals into account when you're planning for this. Um first question is continuation of the business. Uh it's a hard question but you want to evaluate your business and see if you know is it profitable right now? Is it doing good business or is it failing? And maybe we need to rethink it. Um you know should it continue into the next generation. Hopefully the answer to that is yes and then we can move on to the next question of who should step into your shoes when you are no longer able to. Um mentorship is an important thing that we talk about with our farm families. Um you don't want to just leave somebody an alert when you die and say, "Oh, you're taking over the farm." And they have no idea what to do with it. It's a good idea to go ahead and bring someone into that management role, into that role while you are still doing the role and able to do the role of managing the farm. So you can teach them how it works and make sure that they are doing it, you know, the way that you know it works and the way that you set it up and um maybe they have some new ideas to bring to the table as well. Um but mentorship is a good way to um do that. Also when you are thinking about transferring this management you have to think about who would be the best person to do that. Um, a lot of problems come in when it's just assumed that, you know, for example, you know, oldest son has been on the farm working the farm with dad since he was a little boy and dad just assumes that he's going to be the one to take over, but he doesn't ask son, you know, they don't talk about it. He just, you know, dad just has that assumption in his head. That's not a good plan. Um because what if son doesn't want to continue doing the farm? What if what if daughter or younger son wants to take over the farm but they either you know haven't been able to or they've been out doing another career but you know you want to talk to your successors. bring them into those conversations um so that you have an idea of okay this is the person who is wants to keep doing this wants to do it right is going to be responsible enough to do it right and they actually you know have the capabilities and abilities to do it um and so you don't end up in a place where maybe you left it to someone who doesn't want to do it and that might have a not so great outcome. Um, also, how will the transfer take place? Are you just going to keep farming right up until the day? Um, you know, I've talked to a bunch of of elderly farmers and, you know, they their consensus is you can come and find me out in the field when it happens because that's where I will be till the day I die. Um, and that's okay. But, um, some people say, you know, no, I want to retire and move to the beach. Um, so I want this to happen while I'm still alive and still in good enough shape to chase my grandkids around or travel the world or things like that. So, how do you want it to happen? Um, do you want a retirement? Do you not want to retire? Do you want to, you know, be partially involved? That can we can do all of those things with an estate plan? Um, and a farm transition plan. Any of those things. Um, you have to think about the business assets other than the land. The land is going to be the biggest consideration, of course, but what happens with the tractors? What happens with the vehicles, the farm vehicles? What happens with all the chemical fertilizer that's sitting in the barn right now? Um, what's going to happen to the animals? Uh, what if you die during cving season and nobody's there to, you know, help that breach c? uh you can designate somebody as your you know livestock manager uh successor for that kind of thing. Uh cuz we all know that mama cows don't always calf at the most opportune times especially. Um also think about your land and your farm as a family legacy. Um it's very hard to separate the family aspect from the business aspect. Um, it's important to do so when when planning things like this, but I think the statistic in the United States right now is like 97 98% of farms in the United States are family farms. Some of them are gigantic family farms, some of them are really small family farms. But um it's really hard to separate that uh those two things from each other because farms the farm is part of the family. The family is you know part of the farm. Uh and that's a good thing to consider when you are planning. On the other side of that consider that it doesn't have to be family that is your successor. If none of your kids really care about farming, if you know they've grown up in it and they've decided, hey, I want to do something in the technology world or hey, I want to go be a doctor or hey, I want to go I want to go do something different. I want to move across the country and live somewhere else. All those things are fine. However, if you want your farm to continue, we got to find somebody who wants to continue it. Um, and this doesn't have to be family. It can be um a good example is that I always tell uh there was an elderly farmer. He didn't have any children, but he had a neighbor who had there was a young man that lived next door who would come over in the summers and help him with his cows and stuff. Um and this went on for several years. And this boy, I think he went to college and came back and was really interested in farming and he started helping more and more. And they worked out an agreement where this man uh this elderly farmer was he was mentoring this neighbor to eventually take over his farm, be his successor to the farm. So what they did was the neighbor leased part of the cattle herd uh a little more and a little more each year until he was primary owner. Um, and then they, you know, planned out the land transfer and everything like that in this man's estate plan. Um, cuz you have to deal with like the tax consequences of that and and you know, they were definitely talking to attorneys through this whole process. Um, but I thought that was a really creative way to do that because he was able to get to know this person and make sure that he was going to take care of his farm and do it the right way. um and that he really had the heart for it, that he was in it for real. Um and the neighbor got the benefit of learning the ropes from this established um experienced farmer uh on how to do things and he inherited a really good working farm that he just continued to work. Um so there's there's a lot of different ways that you can do it. Um and uh if you have an estate plan and a farm transition plan as part of that estate plan um you can make it happen. Um it takes it does take a lot of planning. Um but the alternative is the state is not going to care about any of this stuff. they're going to look solely at that intestasy statute and that's how your stuff and your land including your farm including the animals is going to transfer. Um, and it's not going to take into account any of these concepts that are central to farming operation. So, we talked about uh the plan. When you're making an estate plan, you want to have a good team around you helping you. Um, first of all, you really need to talk to an estate planning attorney to make a will. You can do a will with Legal Zoom. Um, all there's so many AI programs out there. I do not trust them. Um, the problem with things like Legal Zoom and all that is that you can type in information and it will spit it out into a document. However, it's not going to take into account the family history that you told your attorney or if your attorney sat down and talked to you about your goals and your wishes for the future and you know which of your children wants to take over the farm, which ones don't, which ones, you know, um it's not going to get that personal. An attorney will do a good attorney will do that. Um, and they're going to really dig down and see what your real intentions are. And they're going to be able to help you write or they're going to be able to write that estate plan with those intentions and your history and and legacy in mind. Whereas a computer program is not going to do that. Um, also you want to do financial uh analysis. Um, Dr. Canervich talks about that in his presentation. Um, but you might want to have a financial advisor also on your team when you're planning um to help you through that uh part of it. Other professionals like tax or accountant uh accounting professionals are really helpful to plan help you plan the tax part of it because there's always going to be tax considerations especially with land um transfer of land to other people. um you may not hit the threshold of the $15 million estate tax, but um you want to have an accountant or a tax professional on board to like check and make sure so that your heirs are not getting hit with that with that tax burden. Um and other professionals, uh if you have a trust, bring your trustee into that planning process. Let them know what their role is going to be. Um and so that they are aware when that time comes of what they need to be doing. appraisers. If you have land, when you're making your estate plan, it's a good um time to revisit the valuation of your land so that you know exactly, you know, the value of what you're leaving to someone or transferring. Um insurance underwriters, make sure they're on board. Uh you know, they know who the beneficiaries are. You know, you know, you work with them to understand how the insurance is going to work, that kind of thing. Um, also not to uh advertise, but um if you have a a farm transition coordinator type person in your area, I am one. Um, also Dr. Adam Rabinowitz at Auburn University. Um, we both went through the certification process together this past uh winter and we are available to talk you through this stuff and help you out. um or some another advisor that knows the farm, knows, you know, knows farming, knows agriculture, knows your plans, how your farm works. Um, bring them in, too. Um, and trying to DIY an estate plan leaves you open for significant risks. Um, challenges to the plan. If you, uh, this happens a lot with Legal Zoom wills. If you put something in there, it spits something out, it doesn't make sense or it's contradictory, someone's going to say, "This doesn't make sense. We need to go to court." And then that's going to leave your heirs in a legal battle of hearings, having to go to court, having to dig up, you know, the will, having to call in the witnesses to see what this, you know, what it means. um invalidation. If if something is left out, if you don't have the right validating language in the will or it's not written properly, um that can lead to a court saying this is not a valid will. We're going to do it based on intestasy like that that tractor hood. Um failure to include assets. an attorney and a good estate estate planning attorney is going to walk you through an analysis of all of your assets. Um, some things that you may not think of as an asset may be an asset that you need to plan for. Um, and they'll have a usually it's like an inventory checklist so that you can get a grasp on, you know, what do I have, what do I need to plan for? Um, and they'll already have a system in place to do that for you so that you don't have to start from scratch. Um, and just failure of the plan to operate as intended. If you have an attorney that knows what you want, they preferably know agriculture, know how your farm works, they're going to be better able to tailor that estate plan to work exactly as you intend, whereas Legal Zoom is not going to do that at all. Um, so let the professional handle covering those risks so you don't have to do that. We go to school for three, four extra years uh to learn all the ticky tacky stuff that you don't need to be wasting your time on. We'll handle that part. You tell us your plan and how you want it to work and we'll make that happen. Um, and that will save you time, risk, trouble, money, and it will save your heirs a lot of a lot of trouble and money usually. So, um, some of the documents that, speaking of saving you time and money, some of the documents that you should have located and organized for the purposes of estate planning, um, this is to prepare to go talk to your attorney um, or your tax professional or something like that. Um, if you have an previous estate plan, it's really important to take that one so that you know, they know you have an estate plan. Um because if you redo it, you have to destroy the old one. Um so that's important so that they know what you did earlier so that they can make the new one taking that into account. Um so this this is wills, trust, power of attorneys, healthcare directives, all those documents that we talked about. Um you want to have documentation of your heirs. Uh maybe have a copy of your marriage license on hand. A family tree is a really good thing. If you go to see an attorney about the heir's property problem that we talked about, that's the first thing they're going to ask for is a a family tree. Where did this land come from? Who was the first owner? Who are other heirs that we need to be thinking about when we're planning? Um pre and postnuptual agreements. Uh if you have a prenup or postnup, um that's going to tell the attorney some things that they can and can't do that. you know, if you have agreed not to inherit something from your spouse in a prenup, um, they need to know about that. Um, divorce decrees. Have you gotten divorce? That can have some of the same effects of, you know, divorce severs the ability of your spouse to inherit from you, unless you designate that in a will. Um, so that's important to have. Adoption papers if you've adopted a child or if you are adopted. um that will be helpful so that they know that you know the law needs to treat them as a u biological child. Um so they know that um documentation and valuation of assets is another good thing to have. um personal property inventory, titles to vehicles, um with the make, model, and VINs or vehicles and equipment, uh valuations of those blue books, things like that. Bank accounts, um and list of authorized users and POD designations so that they can incorporate those into your plan. um income information, W2s, tax stuff, uh documentation of investments if you have uh if you're in the stock market, that is an asset that you're going to you're going to be able to leave to someone. Um life insurance policies, retirement policies, pension, and any kind of other employment benefits. Those are going to be important so they can take those into account. If you have a judgment in your favor or not in your favor against you, um you want to bring that too so that they know that uh a judgment in your favor. If you're owed money on a judgment, um that is also an asset. Um property records, deeds are really important because like I said, a deed is going to trump a will uh in the eyes of the law when transferring property. um appraisals so that you know the valuation of your property at that time. Mortgages, tenant and common agreements if you're in that heir's property situation. Sometimes um that's a way that we can help to alleviate some of those concerns if you're if it's not a if you're not able to clear title. Um any agreements dealing with the property uh is important to have business interest. If you are an owner of a business, if you're part of if you have stock in a business, um, or own any kind of beneficial interest in a partnership, LLC, um, co-op, uh, corporation, you want to have documentation of your ownership and interest and also the operating agreement because those will tell you how interest and ownership will be transferred. Um, a lot of times that's written into the operating agreements of the business entity. Digital assets, uh, in today's world, everything's digital. You want to know, you want to have login and email passwords, social media, online banking access information, cloud storage, uh document storage, if you've got, you know, box.com, things like that, intellectual property, if you have a trademark or copyright, something like that. Um, those are important to have at least access to an inventory of. Um, you don't want to just write it down and and put it out there in public. passwords, login, things like that. But you want to have it somewhere where in the event of your death, either your executive or someone that you trust can locate those things so that they can get into your accounts and manage them the way they need to be managed. Um, so those are some things to have organized before you go talk to your attorney or other professional that's going to be helping you um do your estate plan. So, some final thoughts. An estate plan is not a oneanddone occurrence. You want it to change and evolve as your life evolves and changes. Um, you want to revisit it and update it. A lot of attorneys will say do it once a year. I've heard some people say do it once every 5 years. That's a little long, but my rule of thumb is you want to revisit it when life changes happen. If you get married, if you get divorced, if you have a child, um if one of your heirs dies, because if you've left something to someone in a will and that person dies, you got to account for it somewhere else. Um major business changes. If you create an LLC, if you if you buy into a business, if you sell a part of a business, um that's going to change how your estate plan is going to operate. If you bring someone else into a business, um, large asset sales or acquisitions, if you buy farmland, that's a big thing that you need to incorporate into your will or your in your estate plan and your transition plan. Um, you know, you buy big pieces of equipment that now you need to account for what happens to these in the event. Um, those kind of things. Uh, also it's a good idea not to hide away your estate documents where no one can find them. Um, don't bury them out back in a mason jar because nobody is going to know where to find it and they will not be able to file it within that 5-year period. Um, so put it somewhere safe but not hidden. Um, you want to make sure I mean it can be hidden. You can hide it, but make sure somebody trusted either your executive, your spouse. Um, you know, if not those people, someone that you trust and know, you know, is going to have your your interest, your best interest at heart, um, who can go find it when the time comes. Um, and yeah, don't just hide it away and not tell anybody. Uh, because that's a good way to invalidate it if nobody knows where it is to file it. Um, also it's a good rule of thumb to have two official copies. Um, it's really hard to file a copy of a will if it's not a a certified copy from the court. Um, your attorney might keep one at their office. Um, that's the way that I've seen it done um, in situations that I've been involved in. Um, so that if you lose your copy, if it gets burned up in a fire, if it gets washed away in a flood, your attorney will have another valid copy that can be filed. Um, so keep documents that are, speaking of floods and fires, keep it somewhere safe um, and protected from misplacement, theft, fire, flooding, other disasters. We have tornadoes around here. We have hurricanes around here. Um, good things to use are safe deposit box at the bank, um, personal safes, those fireproof safes, fireproof boxes, um, or a lock box. Um, so yeah, keep it somewhere safe, but don't hide it away where nobody knows where it is. So, thank you all so much for listening and uh, I really appreciate it. If you'll have any other questions or um want some more information, you can find me at Auburn. Um and like I said, my email address is on the first slide. It's kew00005 at auburn.edu. Um and yeah, I really appreciate your time and I will see you all next time. Thank you so much.