Daunting is one way to describe estate planning, said Heather Gessner, SDSU Extension Livestock Business Management Field Specialist.

"This is one reason farm families have avoided implementing a plan for their farms and families," said Gessner.

However, even though it may seem daunting, estate planning is essential to the future of family farms and ranch operations. Below, Gessner breaks the process down - making this important task easier to tackle.

"The most daunting tasks can be accomplished if they are looked at in smaller components," Gessner said. "Breaking the estate planning process down into these five components will help keep the task manageable and thus lead to the creation of a plan that accomplishes the goals of both the family and farm operation."

Break down the process

"The big thing to remember about estate planning is that it is a process," Gessner said. "It is more marathon than sprint, and each family needs to work at it and be committed to its creation to ensure a written plan is in place when it is needed."

The process can be broken into five steps:

  1.  Initiate the discussion
  2. Develop your objectives
  3. Compile your information
  4. Seek professional advice
  5. Keep things updated

Initiate the discussion

If you are thinking of the next generation returning to the farm or ranch, communication, Gessner said, will be the lead component to successful estate and transition plans.

"Topics about death, transferring assets, economics, balance sheets, income and expenses and other topics are easy to avoid amid day to day discussions about crops and/or cattle," she said, "but they need to be brought up."

Opening the door to these topics can lead to the prevention of future problems and disagreement amongst surviving heirs. "When everyone is aware of the plan and the reasons behind the decisions that were made - a smooth transition to the next generation can occur," Gessner said.

This process may also help solve current problems that had not been discussed among members of the family. These other problems could include discontentment about job duties and responsibility to changes that could be implemented on the farm.

"Holding a meeting to inform all family members about the goals of the plan may be one way to provide a platform to present your ideas for the farm and family," Gessner explained.

This can also be a time for everyone involved to express feelings and expectations about the plan. At this time, Gessner encouraged participants to listen to any potential concerns or problems the family may have with what will be implemented and when. "Assumptions are the worst enemy of a family estate plan, and can lead to many problems," she said.

While communication is a critical component to establishing a plan, Gessner said it is also important to keep respect in mind. "Parents are opening up about hard decisions and big plans related to the assets they have acquired through their own inheritance and/or hard work," she said. "Coupling the goals they have for the farm and family is not an easy task."

Both on-farm and off-farm children have had many new experiences and responsibilities since high school and/or college graduation, and need to utilize those experiences to ensure the goals of the family and farm are met.

"At the end of the day the farm is still under the ownership of the senior generation and they can do with it what they want," Gessner said. "Allowing the children to express their opinion and ideas should be respected."

List your objectives

Just like a high school basketball team setting a goal of getting to the state tournament and then creating objectives to get there, Gessner said the family and farm need to have clear goals for the future.

The article, Estate Planning, More than Tax Planning discusses the creation of goals for the farm and family further in depth and can be found on the iGrow Livestock community under the Profit Tips page.

The goals and objectives for the farm and family are the directions the estate professionals will use to ensure the correct tools are implemented for each family.

Compile your information

Information is king, and as it relates to your estate plan, Gessner said having all of your personal and business information compiled and organized will save time and money. "Since all assets need to be included in the written plan, a list of land, machinery, stocks, retirement accounts, bank accounts, etc., as well as a list of liens, mortgages and other liabilities needs to be compiled," she said.

While not an easy task, you can replace missing legal documents. Replacing Legal and Financial Documents in South Dakota can be found by visiting iGrow.  

Choose Professional Advisors

"Your advisors are a critical component to the creation of a successful estate plan and need to work with your best interests in mind," Gessner said.

She added that they also need to work with each other to ensure the tools implemented work together to accomplish your goals.

An estate planning attorney is essential for your estate plan. Choosing an individual or firm that works predominately with estates and has a working knowledge about agricultural estates is highly recommended.

Other advisors may include a tax consultant/preparer, life and/or long term care insurance agent, financial planners, and funeral home director. The team will be unique to the family and the tools utilized to achieve the goals developed. 

- See more at: http://igrow.org/news/estate-planning-how-to-get-started/#sthash.QCtdkUL...