Farms are a unique form of family business. They often involve few full-time and permanent employees other than the family members. The land may pass from generation to generation, with multiple family groups all working the same acreage.
A property bought as one massive farm a few generations ago may now house multiple outbuildings and several family homes. There could be several siblings and multiple family generations all living and working on the same farm. Every one of those people could put the farmland at risk.
Protecting your farm takes advance planning. Issues ranging from a creditor lawsuit to one of your children divorcing could force the sale or partition of your family farmland. Moving your land into a trust could potentially prevent third parties or family members from splitting the farm up or forcing its sale in the future.
Divorce wreaks havoc on farmland
When a farming family goes through a divorce, one spouse may want their share of the property’s value. They feel entitled to it because they have worked on the farm for years and share few other valuable assets with their spouse.
However, the land they want to claim may have been in their spouse’s family for three generations and provides for many people. Although the property belongs to the whole family, one divorcing spouse could cause the sale or at least refinancing of the land. Such changes could be devastating for the family. When the land is in a trust, it will be much harder for a spouse to claim it from the courts, as neither they nor their ex directly own the property, nor did they acquire it with marital assets.
Trusts protect you from creditor claims, too
If the land is in your father’s name and he needs Medicaid to pay for his nursing home in his last years of life, the state could come after the property and force its sale to recoup those Medicaid benefits.
Hospitals and other private creditors could also bring a claim against real estate owned by an individual. Holding property in a trust makes it much more difficult for creditors to seek the land or its value in a lawsuit.
Establishing a farmland trust is a smart way to protect your land from outside claims and preserve it for generations to come.