Many families hand down ranch operations and land from generation to generation, with each new owner trying to expand or improve the property. Yet, generations of heritage could be at risk in a matter of days if someone ends up getting divorced.
Therefore, many Montana ranch owners specifically create trusts to hold their ranch property or farming operations so that they don’t have to worry about dividing those valuables assets, possibly handed down from family members, in the event of a divorce. As a result, both those who currently own a ranch and those creating an estate plan to pass a ranch on to the next generation of their family may want to consider using a trust as a way to avoid the loss or liquidation of that property down the line.
Trusts are separate legal entities
One of the reasons that people use trusts to hold certain assets is that it creates a degree of separation between an individual and the asset. Property directly owned by someone is at risk when their creditors sue them or when they file for divorce. Such assets are also vulnerable during probate proceedings. Transferring the ownership of ranch land or a ranching organization to a trust means that the individual is no longer the sole owner of that property or farming business.
The trust is a separate legal entity, which means that it will be harder for a spouse or a creditor to lay claim to ranch land if someone ends up in court. Arranging to hold a ranch in a trust could potentially protect it for generations, meaning that the current owner’s divorce won’t affect ownership and neither will the divorce of those who eventually help run the ranch in the future.
Particularly for those who have inherited their ranch land or who very much wish to pass it on to their children or grandchildren when they die, it may be necessary to take steps to protect the property from future issues that could lead to the forced sale of that property or a claim to an interest in it by an outside party. Creating a trust is one of the more popular ways to protect Montana ranches from many of the legal and financial issues that might endanger someone’s ownership interest or legacy.