Problem
How do you create a new farm succession plan when half of every deed is tied up in a trust?
From R.B., via email
My wife died 12 years ago. Her half of every deed went into a testamentary trust, per her will. When I die, her trust simply divides everything equally between our four kids with no provisions for farm succession planning. Our son started farming full time just before she died. I promised him we’d make it work, so he could continue to farm after I’m gone. Our goal was to get him the 80-acre home farm, plus an option to buy all of our other farms at a 30% discount upon my death. Unfortunately, I’m now being told that I cannot change the distribution rules of my wife’s estate. I feel like I now have one hand tied behind my back with her trust. How can we work around it?
—From R.B., via email
Solution
This is a common problem for older plans, R.B. Think of how much has changed over the last 10 years with land prices, tax laws, and family dynamics. While there’s no “undo” button to your wife’s trust, there are ways to work around it.
Control Your Half
Your will could distribute your entire half of the home farm to your farming son. That leaves him just 37.5% of the total home place (three-fourths of your wife’s half) to buy out from his siblings. You could also give him an additional 30–40 acres off another farm. That would give him about the same land equity needed to trade for his siblings’ share of the home farm.
It’s not quite what you envisioned, and farm deeds don’t always divide that cleanly, but at least this reduces his burden and moves you closer to your goals.
Adjust Your Valuation
You cannot discount the land from your wife’s trust, but you can compensate by allowing your son a deeper discount on your half of the estate. For example, what if your will allowed your son to buy your share of the land at a 60% discount? It sounds steep, but when combined with the full-market value of the trust’s land, his total buyout is mathematically equivalent to a 30% discount across the board. That brings it back in line with your goals.
Settle as a Family
Your kids could sign a binding agreement today for your son to purchase the land from the trust upon your death. The in-laws should also sign off to avoid future conflicts. The question is: Will they all agree to your goal of a 30% discount? If not, what does that tell you about their priorities after you’re gone?
Set Expectations
If you change your will to compensate for your wife’s trust, I’d encourage you to prepare your kids. Otherwise, when you die, they might open your will and say, “Wait! Dad cut us out of the home farm and our brother can buy the rest at a 60% discount?” Might that be a family Thanksgiving stopper someday? Context is key. Set the right expectations by clarifying the goals, identifying the constraints of the trust, and explaining the strategies. Focus on the entire farm, not just your half.
Many farm families are walking into the same trap as you, R.B. They just don’t know it yet. Outdated estate plans can complicate succession strategies. Yet, this is your problem to solve. You are the last one at bat for your family, and while it feels like one arm is tied behind your back, you still hold the power to make a generational difference for those you care about. Make your swing count!
