The Family Farm
In eastern Indiana, situated along the east fork of the Whitewater River sits a farm. It is of modest size by today’s standards (about 200 acres), but is rich in value to its owners. The farm is the place of my childhood and its current owners are my parents.
My Grandpa and Grandma purchased the farm in 1931 from my Grandma’s parents. On the farm, they raised three children. My Dad, being the youngest, was still in high school when his Dad retired. So Dad, at age 16, took over the farming operation.
Because my sister and I took a different path than my Dad and Grandpa, we will probably never actively farm the farm ourselves. However, the farm is just as important to us. We want to preserve our family legacy and farming heritage. Consequently, my parents held high importance in protecting the farm from the costs of their long term care.
Many of our clients come to us in crisis. While we can always help those individuals protect some of their assets, the tightening of Indiana Medicaid eligibility rules favor those with time to plan. That is why it is important for individuals who have an important family asset to protect -whether it be a farm, business, or other asset – to start their asset protection plan well be before the need for care.
An elder law attorney can help protect the family farm for the next generation. A few common asset protections strategies follow.
Sometimes also called an Asset Protection Trust. Typically, title to the farm is transferred to the Irrevocable Trust. For Medicaid purposes, the principal of the Trust (i.e. the farm) is not counted as a resource. The Trust also protects trust assets from events in the lives of the beneficiaries such as a divorce or a beneficiary’s debts. At the death of the creator of the Trust, the remainder beneficiaries take title to the farm. Consequently, the trust allows the initial owner of the farm to live and use it the rest of his or her life while protecting the farm for the next generation. The Trust can also be structured to protect tax advantages, such as the step-up in basis for capital gains tax purposes.
Limited Liability Company.
A type of business that combines characteristics of a partnership and corporation. Its owners have flexibility in how to set up its operational structure which can allow members to receive company benefits without exposing company assets to his or her creditors.
Family Limited Partnership.
A type of business where one or more partners are “limited partners.” After an asset is transferred to the partnership, that property is not subject to the acts outside of the partnership of the partners.
Real Estate Transfer, Reserving a Life Estate.
A life estate is a type of property interest that allows the Grantor to continue to own the real property during his or her life time. At his or her death, the life estate ends and the remaindermen immediately become owners.
Consult an Elder Law Attorney
Anyone looking to implement one of these strategies should consult an elder law attorney before proceeding. An elder law attorney can ensure that the precise legal requirements to implement these strategies are met. The elder law attorney can also give context for the strategy to avoid any unintended consequences with its establishment.
I am a living example that “you can take the boy out of the country, but you can’t take the country out of the boy.” Coming back to the farm often is my opportunity to recharge my batteries and my children’s opportunity to experience country living. My parents’ decision to plan to protect the farm before a long term care crisis was a big gift to me, my sister, and our families. Such planning will ensure that our family’s farm legacy will continue.
If you have a farm or asset of similar importance that you wish to protect, contact the Stinson Law Firm at 317-622-8181 or firstname.lastname@example.org to review your asset protection options.