By: Eric N. Allen February 2016
We are often approached by clients who with good reason are quite proud of the fact that they have been able to maintain their farm or other real estate holdings within their family for four or five generations, and want us as their counsel to establish an estate plan that will allow that land to be unchanged, and in the family, "forever." Those clients frequently express disappointment in learning that nothing written by an estate planning attorney can guarantee that the family land ownership will be perpetual. However, with careful planning the chances of keeping land in a family for a significant period of time can be dramatically increased.
To begin with, there are certain events that are beyond the control of any attorney or plan created by an attorney. Two such examples would be the failure of the family to propagate, thereby leaving no descendants; with the second reason being the loss of the land through action of the government utilizing the power of eminent domain.
Because planning objectives differ, there is no one tool to fit every fact situation. However, there are certain methods of transferring property that will in all likelihood not result in the land staying within the family for many years. Passing land to children or grandchildren in joint ownership virtually guarantees that at some point in time in the future, one of the owners, a former spouse of the owner, or the creditors of that owner, will insist that the real estate be sold and the proceeds divided. Allowing future owners to have the unlimited power to pledge the land for future debts, will additionally increase the chance that at some point in time the land will be lost due to a business failure. These, and other potential causes for the loss of the asset can be minimized through the use of asset planning techniques by an experienced estate and business planning attorney. The key is to establish a structure for ownership of the land that allows future generations to benefit from the productive use of the land, but at the same time minimizing the risk of loss due to short-sided decisions or business failures.
Contact the attorneys at ALLEN WELLMAN McNEW HARVEY, LLP at (317) 462-3455 to learn more about how we can help keep the farm in the family for as long as possible.