As part of the succession planning process, most farm owners anticipate the challenge of balancing the older (transferring) and the younger (receiving) generations’ financial needs. And, they know that a difficult decision about the fair distribution of assets among the on-farm and the off-farm children is inevitable. However, equally important in the succession planning process, discussing prenuptial and postnuptial agreements (“marital agreements”) comes as a surprise or is uncomfortable for many from a family or moral perspective.
As Benjamin Franklin famously declared, the only things certain in life are death and taxes…but the ag/family business exemptions enacted in recent years are reducing the Pennsylvania inheritance taxes for many farm families. With proper planning and action, both before death and even after death, these inheritance tax savings can be substantial.
The majority of crop leases are verbal. This informality works in most instances and that is why so many crop lease arrangements are verbal or the original lease agreement has not been updated for a decade or longer. However, when the landowner unexpectedly terminates the lease, the loose legal terms can make the separation more challenging…and potentially expensive.