64% of Farmers Operate Without an Estate Plan, USDA Webinar Hears

Sixty-four percent of farmers and agribusiness owners have no estate plan, compared with 55% of American adults overall. J.C. Hobbs, associate Extension specialist at Oklahoma State University, presented those figures in a recent webinar hosted by the U.S. Department of Agriculture and laid out what that gap costs farm families in taxes, fees and control.

Being without a plan means relying on others to come up with one, Hobbs said. Not many want that responsibility.

What happens when farmers die without a plan?

Hobbs framed the consequences as five reasons not to have an estate plan, each delivered with deliberate irony.

The legislature can allocate your property. Every state writes its own intestate succession rules. Without a will or trust, lawmakers' default transfer scheme governs the farm, and "it may not be the way you would like to have it done," Hobbs said.

The government can use your estate tax money. A well-built estate plan minimizes estate tax, attorney fees and court costs, leaving more money for family or charities as the owner wishes.

The court picks your executor. If no administrator or executor is named, a court appoints one. "Can they do a better job than you? Not really," Hobbs said. "They don't know your specific background. They don't know what you're really wanting."

The court decides care for minor children. Parents may have far better options than a judge's selection, so an estate plan is a must for operations with minor children.

Grieving heirs inherit the workload. Surviving family must sell the estate, transfer property and settle bills, making decisions they cannot be sure the deceased would have approved.

The stakes are concrete. Hobbs recalled a recent case where estate plans would have been lost had a caretaker not taken careful notes.

Why does planning matter for farm succession?

Hobbs gave three reasons to plan for a future that can arrive at any time:

• Intestacy may determine property distribution, executor selection and care of minor children.
• Written instructions reduce confusion, conflict, settlement costs and unintended transfers.
• Estate plans need review after births, deaths, marriages, divorces, law changes and major property changes.

That review trigger matters for farm businesses, where land, equipment and livestock holdings shift with each transaction and each generation.

Whose choice is it anyway?

Hobbs directed planners to attorneys or accountants for situation-specific advice, because each case differs. Family input has a place, but the decision rests with the owner.

"You can seek the advice or thoughts of your heirs, your children, etc.," Hobbs said. "But remember, the final choice is yours. That is the important thing to keep in mind."

For the 64% of farm operators currently without documents, the default is already chosen: state statutes, court-appointed administrators and tax collectors will divide the operation instead.