Do your heirs understand the history and value of your livestock? If not, start educating them now, including discussing how they fit into your estate plan.
Assets like the family home and land are what most ranchers and farmers think about, when they are talking with their estate planning attorney about dividing assets among their children. However, an estate plan for a ranch family or farmer has to address more than whether or not the on-farm child gets the first option on buying farm assets.
A Beef Magazine article asks, “Are your livestock covered in your estate plan?” The article notes that this “first chance” needs to cover a wide range of assets like equipment, vehicles, personal items and livestock.
Maintaining an itemized list of these assets can help your family recognize their true value. This is especially important, when you consider the value of livestock. When you take the herd to the sale barn, they’ll all bring commercial price. However, do your heirs understand how much you paid for that purebred herd sire five years ago? How about the semen in the tank? Seedstock producers or commercial producers who paid premiums for specific animals, know that the value of these animals isn’t as obvious as the current market price at the auction barn. Therefore, the way in which these cattle should be handled after the current operator dies, needs to be included in the estate plan.
Many ranchers and farmers are looking at livestock trusts. These are written declarations of how the farm owner would like livestock to be cared for after the owner’s death, along with resources and instructions for handling such livestock. Livestock trusts are particularly important, if a rancher’s heirs aren’t involved in the ranch operations. The trust can detail the cattle’s veterinarian and nutritionist contact info, as well as preparations for who will feed the livestock and for how long, if the rancher dies. It can also discuss what happens, if the death is during or immediately prior to calving season or at weaning, as well as how the hired hand is paid.
In addition, if the heirs elect to sell the livestock, the trust can instruct them on the best way to market these valuable cattle to ensure the best price, along with information about a trucking company to haul the livestock and a breed representative who could work with perspective buyers. The sale of semen and embryos must also be addressed.
The ensure that these assets are valued properly, share your knowledge about the livestock. Speak with an estate planning attorney, and consider bringing family members to meet with the estate planning attorney to make sure everyone understands your plan for the future.
Reference: Beef Magazine (December 14, 2018) “Are your livestock covered in your estate plan?”