A Farmer's And Rancher's Guide To Estate Planning

As an agricultural producer, you have built a career through dedication and hard work. However, have you spent the time to take care of yourself and your loved ones by ensuring you have an estate plan that protects you during disability and at death while accomplishing your goals and leaving a lasting legacy?

For many agricultural producers, building a cohesive estate plan is usually pretty far down on their list of financial obligations. Many agricultural producers take the time to work with a financial advisor and their bank establishing long-term relationships, but make a fatal mistake in failing to do the same with a qualified estate planning attorney. You see, estate planning and financial planning go hand in hand.

When you establish your retirement plan, purchase life insurance, and even analyze your personal finances and goals, you are actually taking small steps toward creating your estate plan. However, you are doing so without proper advice. Your life insurance agent is looking at liability and covering risk with life insurance, your financial advisor is looking at when you want to retire and growing assets to meet your financial goals, your banker is looking at your portfolio to determine what loans you qualify for and if your business is worth the investment. Who is thinking beyond your death? Who is thinking about protecting your loved ones during your disability? Who has the long-term foresight to not only protect you, but also your children? Who is looking at tax advantages with planning strategies that match your goals? Who is looking at the entire picture? Who is your quarterback?

Your estate planning attorney should be the quarterback on your team helping you connect all of the players working for you to ensure you have a winning game plan for your death or disability. One player cannot win a game alone. A winning team needs multiple players working towards a shared goal with knowledge of the other players’ roles. A winning estate plan involves a team.


  1. Estate Planning Attorney - Your attorney (or quarterback) should focus on estate planning and maintain significant educational hours (you wouldn’t go to your general practice doctor for heart surgery, would you?) This should be someone you feel comfortable with and who will be able to help your loved ones administer your plan when you are disabled or pass away. Your attorney will help educate you on the different estate, income, and gift tax laws. He or she will also draft your estate planning documents. It is important that you select an attorney that is familiar with the different risks and strategies needed to properly plan for health care professionals.


  1. CPA - A good CPA who is familiar with your personal, professional, and financial circumstances can help analyze your situation and suggest various income and estate planning strategies to help further preserve and build your estate. Your estate planning attorney will rely on these calculations when evaluating what the “right fit” strategies are for your needs. Further, when you pass away, your CPA is an invaluable resource in helping your attorney oversee the tax planning and preparation, valuing your assets, and preparing the final tax returns and accountings.


  1. Financial Advisor -Your financial advisor will help you create a financial plan to grow your portfolio. They advise on capital and income creation through various financial products and insurance to help maintain your loved one’s standard of living in the event of your disability or death. They are also a key player in structuring your retirement and helping ensure you have the necessary funds and investments to reach your retirement goals.


  1. Trust Officer/Banker - Financial institutions can work with your team to help identify the need for life insurance, key man insurance, or other financial products. They also provide Trustee/Executor services, which may be advantageous depending on your situation as they have experience in investment management, recordkeeping, and are familiar with their duties as a fiduciary.



We never know when it will be our time. After you have a team in place, you need to work with your estate planning attorney to ensure you have the right documents in place to help protect your loved ones in the event of your death or disability. The time you spend now to ensure your wishes are followed will save your loved ones from the chaos, confusion, and expense that results when there is no plan.

  1. Create or update your will or trust. You will need to discuss your goals and fears with your attorney to create a plan that works for you. Otherwise, state laws will make the decision for you likely with undesirable outcomes.​​
    • Your attorney will need to review all of your asset information, personal and business, to determine what the right estate plan is for you and your family.
    • Your attorney will also need to determine which estate planning strategies will give you maximum tax and liability mitigation. There is no “one size fits all” solution. This may incorporate a variety of trusts (revocable and irrevocable) and entities (LLCs or Corporations) into your estate plan.
    • You should review your estate plan with your attorney every 1-3 years depending on your net worth and goals.


  1. Ensure your living will (advanced healthcare directive) and powers of attorney are up to date. Your loved ones need guidance on medical procedures you want taken if you are unlikely to recover. You will also need someone to make medical and financial decisions for you if you are incapacitated. Failure to have these properly drafted documents in place results in costly and time-consuming guardianship and conservatorship proceedings through the courts.


  1. Draft your memorial wishes. When we meet with families after the loss of a loved one, the most troubling decisions they are making involve the funeral and related services. Don’t make your loved ones stress over whether they chose the right song or burial service. Give them the information so they know they are making the decision you would have made.


  1. Ensure your estate plan is properly “funded.” Funding your estate plan means ensuring the ownership and beneficiary designations on your assets flow with your estate plan to ensure the plan works as intended. If your assets are not aligned properly, then your planning WILL NOT WORK as intended. Your attorney should review all of your assets, personal and business, and give you detailed instruction on proper funding. Your attorney may also assist you in transferring and retitling your assets.



  1. Ensure your entity’s legal documents are up to date and that you are complying with the terms. Entity’s set up 20, 15, even 10 years ago need to update their documents to account for the changes in the legal and tax landscape. These updates are also crucial in ensuring the business and the owners have the needed liability protection. Simply having an LLC may not provide you the liability protection you need. You must have a well-designed and thought out operating agreement and buy-sell (or transfer restriction) agreement as well.


  1. Value your operation. If you do not know the value of your agricultural operation, your team of advisors is unable to ensure you have the right products in place to protect yourself as an owner as well as the business and its employees.


  1. Create a buy-sell agreement. This agreement creates a plan for the business to protect it and the other owners from the 5 Deadly D’s: Death, Divorce, Disability, Debt, and During Life Transfers.



  1. Do you have the right life insurance in place? Will the coverage provide your spouse and children with the same standard of living when you pass away?
    • DO NOT BUY additional life insurance without first discussing with your estate planning attorney (use your quarterback). While life insurance is exempt from federal and state income tax, it is not estate tax free. Your attorney may suggest an alternative option if you need to purchase more life insurance such as creating an Irrevocable Life Insurance Trust (ILIT) to own the policy. Otherwise, you may end up losing around 40% of the death benefit to estate taxes at your death.


  1. Do you have the right medical insurance in place? You should discuss long-term care, disability, and major medical insurance with your agents to ensure you have the coverage you need (and that you actually understand the coverage you have). Agricultural producers often do not take the time needed to understand how their insurance works together (or does not work together) resulting in unanticipated and often undesirable results during a time of crisis.
    • Your attorney may have solutions for you to protect certain assets from the nursing home. Before purchasing long-term care insurance, discuss these possibilities with your attorney. Often a combination of insurance and protective trust shares results in the best outcome for you and your family. Another reason to always include your quarterback in your planning.


  1. When was the last time you reviewed your IRA, 401(k), and other retirement plans with your financial advisor? Are they performing the way you need to accomplish your retirement goals? Like your estate plan, you should review these accounts with your financial advisor every 1-3 years to ensure you are best utilizing the options available to maintain and grow your estate.



Now that you have set up your base estate plan and your “team” is working together, it is time to dig deeper. Most individuals can stop after Step Four; however, agricultural producers often have other goals, concerns, and risk factors that require additional planning.

  1. Rising Threats of Litigation—Do you need an Asset Protection Trust?
    • Many agricultural producers have a well-founded concern over protecting their assets from creditors. 
    • In short, a Domestic Asset Protection Trust (DAPT) is an irrevocable trust that allows you to protect the assets you place in the trust from your creditors, while still maintaining your right to utilize the trust’s assets for your benefit. Depending on your net-worth and tax efficiency goals, the DAPT can also be structured to remove assets from your taxable estate. A DAPT helps ensure you will not lose your assets and financial security to a creditor, protecting you and your loved ones from life’s unpredictability.


  1. High Net Worth or Anticipated High Net Worth – Do you have a plan to minimize taxes for yourself and your beneficiaries?
    • Avoid losing 40% of your estate to federal estate taxes. Consider an Irrevocable Life Insurance Trust, Qualified Domestic Asset Protection Trust, Charitable Remainder Trust, or other planning vehicles to reduce or eliminate the amount of estate taxes owed upon your death and provide a plan for your family to “pay the bill.”
    • Do you live in a state with a state income tax? Consider moving your assets to South Dakota (this does not mean you have to physically move to South Dakota) so they can grow income tax free. Discuss how to properly situs your estate plan with a South Dakota estate planning attorney.
    • Avoid paying estate taxes at every generation—think about adding a Dynasty Trust for your beneficiaries.


  1. Charitable Giving Goals – Physicians, more than any other profession, have higher charitable goals. If you have charitable intent, there are many options available to help you minimize your tax liability now and at your death (estate, gift, income, and capital gains taxes).
    • Consider a Charitable Trust which will afford you tax deductions and allow you to impact the organization of your choice in the manner you choose:
    • Charitable Lead Trusts reduce or eliminate taxes when transferring assets to your beneficiaries at your death while generating a charitable gift from the income and appreciation of the assets during your lifetime.
    • Charitable Remainder Trusts provide you an income during your life, but the assets pass to your selected organization upon your passing. These trusts are generally more tax beneficial for donors giving highly appreciated assets.



Agricultural producers may have unique planning goals and concerns, however, they often make one fatal mistake - they fail to plan. A combination of complex planning needs and busy lifestyles leads to many agricultural producers putting off their estate planning year after year. Would you tell your spouse to handle their own chest pain? To skip their annual physical? To ignore that lump in their breast? A qualified estate planning attorney who routinely works with agricultural producers will make the estate planning process as simple and efficient for you as possible. You spend every day caring for your operation, now take the time to care for yourself and your loved ones. 

Brooke Swier Schloss
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Family Law and Estate Planning attorney helping families across South Dakota plan and protect their loved ones