Estate Planning for the Family Owned Business, Farm, or Ranch
A family business is more than just a business – it’s your heritage and your legacy. Family owned businesses, farms, and ranches face a number of unique challenges when it comes to estate planning. Unfortunately, these challenges result in over 70 percent of all family businesses failing to survive the transition to the next generation.
Land Rich, Cash Poor
One of the most common problems that a family farm or ranch faces is that the business is land rich and cash poor. In other words, the business may have millions of dollars tied up in farm land, equipment, livestock, and/or crops but have very little in the way of actual cash on hand or assets that can be easily liquidated. While this sometimes presents a problem while the owner of the business is alive, it creates a much bigger problem when the owner dies unless a comprehensive estate plan has been created to address the problem. The problem arises because federal gift and estate taxes are calculated based on the current market value of all assets owned by the decedent at the time of death without regard to what type of assets they are. All too often this results in a sizeable tax bill with very few liquid assets available with which to pay the bill. The only option for surviving family members may be to sell crucial assets used to run the business, meaning that the business will not survive the transfer to the next generation.
Estate Planning Solutions
While a family business – particularly a family farm or ranch – does make estate planning more complicated, it certainly does not make it impossible. On the contrary, a well thought-out estate plan can increase the likelihood of your family business surviving the transfer to the next generation significantly. Numerous estate planning strategies are available to help ensure that your business will make a smooth and successful transition to the next generation; however, the key to making these strategies work for you is to start early and review your estate plan on a regular basis to make sure that it is up to date.
The estate planning attorneys at Law Offices of Richard B. Schneider, LLC are committed to helping your family business, as well as your legacy, survive. Contact us today by calling 503-241-1215 or through our online contact form so that we can make plans to sit down and discuss how to best structure your family business, farm, or ranch to ensure that it will flourish for many years to come.