If you have carved out a ranch in Montana, you are likely quite proud of your operation. You may dream of passing the family ranch down to your children. Whether you hope that one of them will run the ranch on their own or that all of your children will share the land together, your hopes may be unrealistic.
A significant number of children who inherit ranches or farmland from their parents or grandparents will sell the property. Even if you leave the property jointly to your children, one child who doesn’t want to keep the land could complicate the arrangement for the whole family. They could initiate a partition action that divides the ranch into multiple parcels or forces the rest of the family to sell.
You can act while you are still alive to prevent your children from breaking up or selling your ranch later. How do you preserve your ranch when planning your future legacy?
You can move the ranch into a trust
Many farmers decide to move their family property into a trust. The benefits of doing so are significant. Property owned by a trust will not be subject to claims by creditors if individual owners or farmers fall behind on their financial obligations. The land will also be less at risk if one of the owners divorces, as trust property is not necessarily part of the marital estate.
When the owner dies, the trust helps protect their legacy. The language used to create a trust can limit what people do with the property and even determine what will happen when the initial beneficiaries die. You can prohibit family members from selling or splitting the property and even arrange for it to transfer to someone else or a charity when your children retire and stop working or living on the property.
Trusts can also help by shielding your estate from federal estate taxes. Big ranches with millions of dollars of property could shrink in value because of federal estate taxes. Overall, a trust can be a way to protect the land that you love and guide your children regarding how they utilize the inheritance you leave for them.
Engaging in the right estate planning practices now will help protect the assets you have created and the property that you want to preserve for generations to come.