Many producers put off estate planning because the process feels complex and uncomfortable. Estate planning for farms also comes with unique legal, family, and business considerations.
Hiring the right professionals is vital, and that costs money. But the cost of inaction is steeper than the upfront investment of time and professional support. Comprehensive estate planning protects your farm, your family members, and the future you’ve worked to build. This article puts the costs of estate planning into real-world farm terms, showing that the true cost lies in not having a plan when it matters most.
Key takeaways
The earlier you start estate planning, the more control you have over what happens next.
If you delay planning, the cost doesn’t go away—it grows.
A coordinated, team-based approach leads to a holistic plan for the future of your farm and family.
How estate planning protects farm assets, family, and legacy
A comprehensive estate plan strikes the right balance between business continuity, retirement income, family dynamics, and tax strategies. Done correctly, it requires regular reviews and updates as your farm, family, and retirement needs change.
It is never too early to develop an estate plan. If the unexpected were to happen—and it does—an estate plan is vital to the continuity of your legacy and peace of mind.
Estate plans also serve as the foundation for succession plans, providing a roadmap to the future for all involved; you have time to mentor successors and transfer responsibilities, and the next generation can prepare for the financial obligations of taking over the family operation.
When you plan early, succession becomes a controlled transition, not a crisis.
Real-world benefits of estate planning
Protecting land from nursing home costs
A farmer owned 11 quarters of land, 60% tillable, 40% pasture. He wanted to keep the land in the family. His two sons were each buying additional ground and were highly leveraged. One of the objectives of his estate plan was to avoid “at all costs” selling real estate in the event he and his wife required long-term care that exceeded the $100 a day allowed under their nursing home insurance.
After consulting with succession and retirement officers at AgCountry Farm Credit Services, the parents transferred land to their children and established a life estate for themselves; they preserved their legal right to farm-related income for life and, after five years in the sons’ names, prevented the sale of real estate to repay Medicaid for nursing home care.
Eventually, they did enter a nursing home, and the monthly cost outstripped their insurance benefits, cash rent, and Social Security. But the family’s land remained secure under the ownership of the sons.
Defined benefit plan for retirement income, lower tax bill
A farm couple had 50-50 ownership under a S Corporation. They had no successors and scheduled an auction. With the support of AgCountry, the couple set up a defined benefit pension. The auction and sale of grain inventory allowed the couple to shift $1 million to their pension, generating an additional source of retirement income and saving them $300,000 in taxes over three years.
Lease agreement for transfer of ownership
Two brothers were retiring at the same time and turning their land over to two younger farmers, who also planned to buy the operation’s extensive bin site and most of the equipment.
Concerned about a potential tax bill of more than $1.2 million if the sales were completed in a single year, the brothers worked with AgCountry to establish individual pensions, funded with grain sales. They and the younger farmers signed leases to transfer ownership of equipment and bins gradually. This spread out the brothers’ tax bill and allowed the younger farmers to preserve capital and equity in previously purchased ground.
Barriers to estate planning
The need for an estate plan isn’t lost on producers. The challenge is getting started.
When the day’s to-do list needs immediate attention, planning for “someday” takes a lower priority.
Estate planning can also involve tough conversations with business partners, family members, and advisers. Who takes over? How do you transfer ownership and management of the farm? What do you need for a comfortable retirement while still helping the next generation get a start? If you wait for the “right time” to have these discussions, they are unlikely to happen—so they don’t.
Then there is the plan cost. Writing a check for legal fees and advisory work isn’t as tangible as purchasing equipment, land, or inputs. Instead, estate planning can feel like an expense rather than an investment in the future of your operation and family.
Put it all together, and many operations delay estate planning.
Estate planning cost breakdown: A per-bushel perspective
But waiting doesn’t remove the cost. It just changes when and how it shows up—a predictable, controlled cost today, or a harder-to-manage, incalculable cost later.
One way to think about the plan cost is to calculate it on a per-bushel basis.
Let’s start with a farmer who has 1,000 acres and an average yield of 160 bushels per acre. His estate plan needs aren’t overly complicated, and his plan cost is middle-of-the-road at $6,000, including a succession and retirement consultant and attorney fees.
1,000 acres X 160 bushels per acre = 160,000 bushels
$6,000 plan cost ÷ 160,000 = 3.75 cents per bushel*
*Cost in year plan is completed.
Compare this to other per-acre expenses for the same operation, assuming the farmer’s costs on his corn fields are low to average for the area:
| Expense type | Per-acre cost |
|---|---|
| Fertilizer and lime | 90 cents |
| Seed and crop protection | 75 cents |
| Fuel and machinery | 40 cents |
| Cash rent | $1.20 |
| Labor, insurance, interest | 45 cents |
| Estate planning | 3.75 cents* |
| *Cost in year that plan is completed. | |
This is far less than other costs, and it buys something invaluable—peace of mind.
Now consider the potential cost of inaction, including:
Delays in transferring land and assets
Legal and settlement expenses
Family conflict and uncertainty
Disruption to the operation
Lost opportunities for the next generation
Costs aren’t eliminated. They are shifted, often at a much higher price, monetarily and emotionally.
Real-world costs of delaying farm estate planning
Farm failure
Two brothers with 50-50 ownership of farm assets had a buy-sell agreement that detailed what would happen in the event of departure, disability, divorce, dissolution, or death. But the terms of the agreement didn’t keep up with current circumstances, so when one brother died, the other was unable to afford the deceased brother’s share. The farm was liquidated.
If it’s not in writing, it doesn’t exist
Parents with four children told the one farming child, “Don’t worry, this will all be yours someday.” But Dad didn’t put his intentions in writing. When Dad passed early, Mom became the sole owner of the farm and its assets. She offered the same assurances to her farming child, until the family got together for estate planning. Mom wanted all her children to “agree” to an estate plan; the farming child wouldn’t agree to the terms. Mom passed without a written plan, and the assets that the farming child worked a lifetime to earn were split equally and sold.
Poor record-keeping, outdated partnership agreement
Brothers drafted a partnership agreement in 1975. Over time, they grew their separate operations, while maintaining the partnership as leverage when needed. Forty-six years later, the brothers began to discuss which assets were available for transitioning the operation or retiring. While the partnership agreement was never updated, each of their operations had gone in different directions. The less prosperous brothers wanted a share of the more profitable operations.
Poor record-keeping, lack of acceptable tax records, and an outdated agreement contributed to the dissolution of the partnership, which inevitably resulted in non-favorable allocations for some parties and strained family relations.
Building an estate plan with trusted advisers
Estate planning takes time, coordination, and a willingness to work through details—from ownership and management to legal structure and how the operation supports both your retirement and the next generation.
Fortunately, you don’t have to figure it out on your own. The right team—attorneys, advisers, and transition consultants—breaks the process into manageable steps and helps you build a plan that fits your operation and family.
What a comprehensive farm estate plan includes
A holistic approach looks at your whole operation and includes but isn’t necessarily limited to the following:
Estate plan. The size and complexity of an estate determine how much time and cost are involved in developing a plan. A good plan involves:
Deed research and a list of deeded property to determine land ownership
Revocable living trust to reduce probate and privatize settlement
Last will and testament to appoint a personal representative
Durable power of attorney
Health-care directive
Deeds to re-title land if necessary
Nursing home planning.
Transition plan. The estate plan often serves as the foundation for building a transition plan. Its cost is much more variable. Expect your transition plan to take years to complete.
Entity formation. Just as a dentist can’t determine what work you need until the examination is complete, a succession and retirement consultant analyzes your business before recommending the best entity structure. Cost depends on factors such as the quality of the operation’s bookkeeping and the need for an attorney to draft a buy-sell agreement.
Entity maintenance. If an entity exists within the business structure of a farm, annual meetings are recommended. Associated costs would include time for and minutes from the meeting, and a customer summary letter.
AgCountry offers business services for the financial well-being of farms and ranches.
Estate planning works best as a process. It puts you in control of transferring your operation, protects retirement income, potentially reduces taxes, and helps preserve relationships. Contact our succession and retirement team to start your estate planning. Explore our full lineup of business services, including appraisals, tax management, succession planning and more.
