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Building Your Estate Management Dream Team

Estate management requires a team of people, where each team member plays a different part in the process. While your goals define the process, your team puts the pieces together. Think of this team as a three legged tripod — each leg must be solid and supportive in order to precisely execute your plan.


Certified Public Accountant, or a CPA


The first leg that holds up the tripod is a good CPA. This needs to be someone who sees the long term picture of where you are going long term, not just a year at a time. Beyond harnessing the vision, your CPA also needs a backing of their own. You may be wondering what I mean by this, let’s look at an example.


A farm family I know had a long time accountant who decided to retire right before tax season. This CPA was paper heavy and didn’t do much on the computer, so the records were not available electronically. This created a mess because of all of the backtracking my client had to do in order to get the needed information from prior years.


If you think about it, your accountant is collecting various documents each year to properly file your taxes. Take that and multiply it by the number of years you’re working with your CPA, and you’ve got a nice stack of paperwork. If that paperwork isn’t filed digitally, the process of pivoting to a new CPA in the case your own isn’t available becomes daunting. Moral of the story — Make sure your CPA has someone who can step into the role in case they cannot, as well as a seamless process to share all your tax documents. This is a good standard for all members of your team.


Attorney


The second leg of the tripod is an attorney — and not just any attorney. This needs to be someone who clearly understands farm succession because it is different than regular succession and estate planning. As great as so many of these small town attorneys are, they have so many varied tasks to perform that they may not have deep knowledge of something like succession planning for a farm. They may be bailing someone out of jail in the morning for driving under the influence, in the afternoon they are working on a divorce case, and then at night they may be looking at your estate planning.


When they are so multi-faceted, it is difficult for them to fully understand everything they need to help you put together the best plan. It is just too complicated with changes to the laws, and all of the details that need to be considered, so it is critical to have someone who specializes in estate planning, particularly for farms.


Financial Advisor


The third pillar of this tripod is a financial advisor you can trust. In this process, your financial advisor is like the Quarterback. They are the ones to bring everyone together to make sure the right “plays” are made. By calling the plays, financial advisors can ensure that each person is doing things the way they need to be done in order to secure a strong future for your family.


For example, an attorney writes wills and trusts, while financial advisors work with long term care planning. So the attorney asks how you are going to handle long term care planning, and if you do not know, the attorney is limited in the options they can present because this is not an attorney’s area of expertise. However, the financial advisor will know of many options. So, you’ll want to pre-plan with a financial advisor before organizing with an attorney.


The financial advisor will work with you beforehand and help you gather information the attorney needs to know for the will and trust, such as the long term care I mentioned before. This way, you will be prepared with the answers.


Sometimes people come to me and tell me they have already worked with an attorney. On one hand, that’s great to hear, as it means they have taken initiative to get something done. However, I have seen gaps when people meet with an attorney but not a financial advisor. As the quarterback, the financial advisor can give you some basic information and help you sort through the process in order to make sure the team is communicating and working together. They can make sure all aspects are covered before the attorney and CPA do their respective parts.


If you have talked to one or two members of this team, but not all three, be sure you loop back to them in order to make sure all aspects are covered before finalizing your plan.


While we’re on the subject, let’s discuss wills and trusts for a moment. I want to educate you with a less technical, non-attorney perspective with what I know. First, wills and trusts are only a small part of the process. While they are important, there are so many other factors. It is critical to have the planning done before you complete the will and trust. A will goes through probate, and may be really simple, or quite complicated. Where I get calls are on the more complicated situations. I had a situation awhile back that involved three kids and a stepmother.


The kids all played different roles on the farm and got along great while running a good operation with no issues whatsoever. But once the stepmother became involved after the father passed away, things changed. For the entire five years since he passed away, they have been in probate and having problems. The three kids are in $100,000 of debt over this, and I can safely assume the stepmother is as well. They are still trying to work out what they thought the father wanted. When they walked into the courtroom, the judge told them to stop farming while things are sorted out. Obviously they can’t simply stop farming, as they have to keep it running. Sadly, the last I knew, they were still in probate trying to sort things out, so this is certainly something you want to avoid.


A will might be fine for a relatively simple situation. When the finances are simple, such as a house, investments, and bank accounts, a will tends to work fine for establishing who gets what. However, if you have something complicated like a farm, this just isn’t enough. You need more detail, something to cover IF this, THEN that. These if/then situations are critical to map out.


The trust explains these situations. It maps out exactly what you want, such as, “I’d like my son to farm it, but if he’s not interested, I want my neighbors to be able to rent it.” You can use that trust to spell out your wishes in any scenario. Because of the complexity required and the flexibility provided, most farms I work with use a trust.


Once you have worked with an experienced Financial Advisors who specialize in farms and layed out the details of what you want to see happened and made sure the protection pieces are in place. Then it is time to seek legal advice from an attorney. Every situation is very specific and you will not find the answer to your plan from your neighbors or even in a book. You must seek qualified advice specific to your situation.


If you need help getting started please reach out to me at 605-878-0344 or email me at heather@heathervenenga.net. I am here to get you on the right track.


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