Some adults decide to establish an estate plan because they are on the cusp of retirement. Estate planning is a way for them to take stock of their financial circumstances, ensure they can afford long-term care and connect with the right assistance as they age. Other people create estate plans when they start families or after a doctor diagnoses them with a debilitating medical condition.
For some people, estate planning occurs because they want to protect their most valuable resources. Individuals who start or inherit a family farm want to protect the land that they work. The acreage and buildings that comprise the farm could be worth millions of dollars in some cases. All it takes is a few bad harvests for a farmer to fall behind on their financial obligations and risk the loss of their property. The divorce of the farmer or any of their children who work on the farm could also put the farmland at risk. Estate planning is there for incredibly important for those with farmland in Pennsylvania.
How can an estate plan protect a farm?
One of the most common solutions for the family farm in an estate plan involves the creation of a trust. A trust can own the land so that it is not the property of any one individual. Farmland held in a trust is less vulnerable to creditor claims. It may also have protection in the event of a divorce.
In fact, trusts can help ensure the continued operation of the family farm by limiting how others use the farmland. Putting the farmland into a trust could help someone prevent their children or other beneficiaries from selling the farm after they die. Provided that the owner of the farmland creates the trust before divorce or collection activity is imminent, they can move forward with their life confident that the land they work is not vulnerable should they face legal challenges later.
Creating a trust and other estate planning documents can be a challenging process. The protections derived from a farmland trust can make that effort worthwhile. Farmers who want to protect their property often need to be proactive about addressing potential risk factors including divorce and creditor lawsuits.