In the farming community, estate planning is a common topic at meetings and workshops. But what does it really mean? Ultimately, estate planning is simply planning for the future. Farmers plan daily as they prepare crops and livestock for market. Estate planning is one more element to help secure the farm for the next generation. The process can seem daunting, but it’s important to prepare for the future.
The most common form of an estate plan is a will. However, an estate plan is not limited to a will. An estate plan can be made up of several documents, such as a living will, powers of attorney or incapacitation documents. A will lays out the way a person would like their property distributed once they die. Wills can be as simple or complex as necessary to accomplish a person’s goals.
Powers of attorney and incapacitation documents allow a person to choose someone to act on their behalf if they become incapacitated.
Creating an estate plan will ultimately require an attorney’s assistance; however, following these easy steps can build confidence and lead to more productive discussions with an attorney.
1 Compile a list of assets. This includes how much land and other property the farmer owns outright, bank accounts and shares of stock. Include a general value of each of the assets, including fair market value for land.
2 Create a list of trusted individuals. These people could serve as executor of an estate or act should incapacitation happen. An executor oversees probating someone’s estate. Their main responsibility is to make sure the deceased person’s wishes are carried out according to the will.
When planning, farmers should consider the possibility of incapacitation. A power of attorney allows a trusted individual to make financial and health care decisions on behalf of the incapacitated person.
3 Be aware of how property passes if a person does not have a will. In some situations, a surviving spouse may not receive all their spouse’s property. Under current Alabama law, if the individual dies without children, the spouse is entitled to the first $100,000 worth of the estate and splits the balance with the deceased person’s parents. If a couple has children, the spouse receives the first $50,000 worth of the estate and splits the balance with children they had together.
In the instance of death without a will, property will still pass to inheritors through intestate succession. In this process, a deceased person’s property passes to heirs as defined by the Code of Alabama.
In some situations, intestate succession may meet an individual’s needs. It’s important for farmers to be aware of other options so they can responsibly plan.
Farmers could also contemplate securing a life insurance policy. Visit AlfaInsurance.com to learn more.
Special thanks to Leah Mitchell who helped provide the information featured above. Mitchell, a member of the Alabama Farmers Federation State Young Farmers Committee, is an estate-planning attorney who practices in Alabama and Tennessee. Check out AlfaFarmers.org/aglaw to learn more about estate planning.