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| THE WORLD'S SECOND WORST ESTATE PLAN The second worst estate plan I ever encountered was one brought to me by a mother and daughter in Virginia's Shenandoah Valley. Wanting to be sure that his sons inherited the farm, the late father had insisted that he and his wife sign a joint will (a very bad idea, in itself) and that they provide in that will that their sons were to receive the farms and that their daughters would receive the cash and stock in the estate. With the farm land rapidly appreciating because of its strategic location, the likelihood of a $4 million estate, heavily weighted toward land, was evident. The only liquid assets were approximately $1 million in stocks and bonds. With a highly taxable estate, their federal estate tax would approach $1 million. Hence, the plan called for the sons to receive the farm and for the daughters to receive enough cash to pay the federal tax. Each state's laws regarding joint wills are different; so, I wasn't sure what Virginia's laws would require. My recommendation to the lady was to go to her lawyer as fast as possible and to try to create a plan that would not cause her daughters' inheritance to be used entirely to pay tax. Having designed the estate plan for scores of farmers, I find this desire to leave land to sons and cash to daughters to be a pretty common goal. Fathers often remember how hard it was for them to get started in the farming business ... and they want an easier life for sons. The Family Limited Partnership is often the best answer to this problem. All farm families should understand this outstanding estate planning device and should seriously consider its use. |
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