Leaving the Farm For Generations to Come
Randy and his wife have five children, and two are still at home. They don't know how to divide their inheritance up between the kids. Randy doesn't want his farm to ever be sold.
QUESTION: Randy in Missouri and his wife are 55 and live on a paid-for farm. They have five children, and two are still at home. They don’t know how to divide their inheritance up between the kids. They’d like to have a place where their grandkids can learn about farm life and the country. Randy doesn’t want his farm to ever be sold. Dave tells Randy this may be difficult to do.
ANSWER: It’s difficult to do it, and the problem is that who knows what 100 years after your death looks like? You don’t necessarily want it to be tied to that. I know one guy who said, “Okay, we’re going to leave this farm in a trust. The trust is to be managed by the kids.”
There are things that are called land trusts where you can dedicate a piece of property to be used only for nature or to only be used as farmland. The title is permanently marked up to where there will never be a shopping center built on it—that kind of a thing. It won’t be split into 5-acre tracts for homes or something. You can do that kind of a thing.
The other thing you could do would be to leave it in trust. What this one guy did was he said, “If the kids ever sell the farm, 90% of the proceeds go to XYZ Charity, and they only get 10%.” So they really have no reason to sell the property.
The first generation, you can probably influence your children on what to do and put some things in place. The third, fourth and fifth generation, it’s very tough to be able to manage that from the grave, so to speak. I think the big thing here is you pour the values that you’re talking about—the values that include a person who has an appreciation for some land or some woods or a nice lake—and you pour those values into your kids and you speak to them about that being a generational value, that it would mean a lot to you to be passed on and that in the name of that, we’re going to leave this land in trust for them to utilize. That’s assuming it’s not a working farm where somebody’s trying to earn a living off of it—those kinds of things. But if it’s just a nice piece of ground that the family would just enjoy and have a place to go out to the farm on the weekends and the kids could have a pony or whatever, then that trust idea might work. You could sit down and talk to an estate planning attorney. They can give you a couple of ideas on this. I think I’d do it as much by influence as by legal maneuvers.