Latest / CattleUSA Daily / 138: Keeping Family Land in the Family with Paige Harding

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138: Keeping Family Land in the Family with Paige Harding · CattleUSA Daily

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Welcome to another episode of the Cattle USA Daily podcast.
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We are welcoming back once again Paige Harding.
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Paige is an attorney from Southwest Kansas and a dear
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friend of mine. And Paige has been on the
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podcast a few Times Now. She was actually on the podcast
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last week as well. But this week we are talking
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about protecting the family land.
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What does that mean in estate planning and how should we be
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doing it properly when talking about succession planning and
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estate planning just in general? So without further ado, let's go
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ahead and hop into this podcast with Paige.
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But before we do, if you could take half a second to go like
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subscribe, rate, review, do all of those things, we really
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appreciate it here at the team. It allows us to continue to grow
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this podcast and continue to bring these episodes to you
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every single day. So take a couple seconds right
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now to go do those and let's hop into this podcast with Paige.
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Welcome to the Cattle USA Daily Podcast, your go to source for
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the latest livestock markets, industry insights and the update
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shaping agriculture today. I'm your host, Lauren Moylan, a
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passionate advocate for agriculture here to keep you
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informed and connected. Now let's dive into today's
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episode. Paige, welcome back to the
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podcast for another episode in another week.
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We are so excited to be bringing these episodes to our listeners
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and every single week for the next few weeks on talking about
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estate planning and the legal aspects of it and everything
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else that comes in between. We've had you on the podcast a
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few times. For all of you listeners out
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there that are unfamiliar with Paige, she has just a fun and
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amazing story. She's not only an attorney, but
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also a cattle woman from South West Kansas and a dear friend of
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mine. So I'm so excited to have Paige
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on and here to talk about the family land today with all of
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you guys and what that looks like and how to protect that
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within estate planning, but then also just within succession
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planning and general, what does that look like for us and how
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can we continue to protect family land and keep it in the
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family as we go throughout this? So Paige, when we talk about
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protecting the family land, what does that mean?
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So when? I talk about protecting the
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land. I typically mean making sure
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that it stays in the family intact and doesn't get lost in
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the divisions of different families or especially family
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disputes after you're gone. So for a lot of rural families,
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the land is the legacy. Most of us farmers and ranchers,
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we literally cannot do our jobs without it.
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So it's not just dirt, it's history, it's heritage, and it's
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our entire livelihood. Good estate planning, make sure
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that the next generation can keep it up, not sell it off in
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pieces just to settle up. So my favorite book is Gone with
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the Wind. And yeah, the love story is
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great and all in that book, but I love it because of the story
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of how Scarlett learns how much she loves their homeplace and
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how far she will go to protect that place.
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At the beginning of the book and the movie, the father is talking
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to Scarlett and he says the land is the only thing in the world
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worth working for, worth fighting for, worth dying for,
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because it's the only thing that that lasts.
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And I just really love that. And that's something that rings
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true and resonates with me every single day because I see this
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working with all of my farming and ranching clients. 100% What
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are some tools and strategies that people can use to make sure
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that they are protecting their land?
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Yes, two of the biggest strategies tools are trust and
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LLC's. And I do want to make a
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disclaimer that you need to go speak to an attorney to see what
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is best for you. I'm going to be talking about a
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couple of different options, but there are so many pros and cons
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to each person's personal situation.
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So make sure that you go speak to an attorney about what is
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best for you and your operation. But back to this a trust and an
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LLC though. A trust allows the land to pass
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smoothly without probate, and it can have very distinct rules on
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the control built into how the land is managed or sold.
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And an LLC can group the land into a company where the
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ownership interest is in the land and not the land itself can
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be passed down to the next generation.
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So this keeps the the land whole while giving it on flexibility
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about how it's managed. Another key strategy that I
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recommend for almost all my families is creating a buy sell
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agreement among the heirs. And this is basically a plan
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that says if someone wants out to the others get to the chance
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to buy their share before it's sold to an outsider.
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So a first try of refusal type thing and you can put that
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specific clause in a trust or in the operating agreement of an
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LLC as well. So a strategy that I have really
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liked using lately is holding the land and trust for a period
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of years. And during this time the farming
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heir will pay rent to the trust and those proceeds will be split
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among the rest of the heirs. And during this time the farming
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error will be able to buy the land at a discounted rate like
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$0.70 on the dollar. Some sort of discounted rate.
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Because when you think about it, you know this land has been in
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the family for generations, so why should each generation have
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to keep buying the land? So trying to figure out a way
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for that farming air or the on operation air to get that at a
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little bit of a discounted rate is something that has been a
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good tool that has been in my toolbox lately.
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And so again, those proceeds from that sale will be split
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among the errors. And this is a great strategy for
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several reasons #1 As we've discussed, there's no
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one-size-fits-all strategy. So this can be easily tweaked in
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order to fit your specific needs and your family specific needs
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#2 the land will be discounted so you don't have another
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generation buying the land outright because as we already
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talked about, that's a little bit silly.
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It's discounted so the non farming heirs do get some cash.
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Another thing that I've seen people do is distribute half the
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land to the farming heir and hold the other half in trust,
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then make the farming heir buy the rest of the land for a full
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price and those proceeds will be distributed to the non farming
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heirs. A lot of people will also use
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life insurance policies to make the distribution a bit more
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fair. Or if they have a home in town
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or a house in town or a vacation home, the non farming heirs will
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get that in order to make it a little bit more equal.
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So keep in mind that these are only a few examples of options
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that you might have. A good lawyer will give you
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several options and help you determine what best fits your
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family specific needs for your situation.
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And at the end of the day, the clients in control.
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So whatever you say goes, but a good attorney will give you
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several options to choose from. One more thing that I want to
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make note of is what's fair is not always what's equal for
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farming and ranching families. And I'm going to say that one
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more time. What's fair is not always what's
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equal. So if you want the farm or ranch
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or small business to stay in your family, what might be fair
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in order to do that is not going to be an exact equal
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distribution for your heirs. And that's something that you
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need to keep in mind. I encourage my clients to have
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very open and honest conversations about this because
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the last thing you want is one of your kids getting thrown a
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curveball. And that's where litigation
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happens. So have a conversation with your
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kids or your heirs, whoever that may be, about what's going to
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happen. And keep in mind, what's fair is
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not always what's equal. I think that's something that's
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so important to keep in mind because we've been working
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through this whole estate planning trust thing in my
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family for a little while now. We're slowly taking bites at it.
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And you know, it's one of those things that I would have liked
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to have had it done months ago. But you know, you're working
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with siblings, parents, everyone else and slowly but surely
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having the conversations chipping away at all of these
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things and looking at that aspect that you just said that
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it's what what's fair isn't always equal.
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I think it's so important to keep in mind because like you
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said, we want to keep ranching in the family.
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We want to keep land in the family.
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We want to be able to have this be something that can continue
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to go on for generations. And being honest with ourselves
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in that aspect that, hey, if I have 4 kids, it's not going to
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look exactly fair. They're not all going to get
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quarter, quarter, quarter for everything that I'm worth and
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everything that the land is worth because we want to keep
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this ranch in the family. My, my dad and I had a really
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hard conversation of the fact that like, hey, if my brother
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decides he wants to come back and wants to ranch, we want to
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give him the opportunity to do so.
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But we can't just split everything in half because he
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would never, ever be able to pay me back for that other half.
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He would have to go get a loan. And the amount of money that it
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would cost for him to pay me back is he would just be the
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entire time and it just wouldn't make sense.
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So can you break down like, does it make sense to treat land
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differently than cattle and equipment in that aspect?
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Because I think land is something that is a major asset,
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right? And we look at it and it can be
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treated differently. But does it make sense to be
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treating land differently in that aspect?
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Yes, absolutely. So land is always without a
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doubt the most emotionally charged asset.
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Cattle and equipment can typically be sold or rotated
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fairly easily, but land holds deep sentimental value and is
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typically the highest value asset.
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One thing that I have recently come to learn and understand
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more is the off farm heirs and how emotionally attached they
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can still be to the farm. So I, you know, grew up on a cow
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calf and crop operation. I regularly, I'm still, you
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know, deeply, deeply in charge of all of that operation,
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running cattle with my sisters, helping check cattle, work
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cattle, you know, whatever it may be.
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That's something that is still in my everyday life.
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So I'm not going to lie, I have had a very hard time
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understanding the emotional connection for some of the off
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farm airs. And I have only recently come to
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really deeply understand that, you know, this is a place, the
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Home Farm, the home operation is a place where everyone grew up.
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It's their childhood. So they do have an emotional
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attachment to it and they have an emotional attachment to it
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that might look different than the on farm air.
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And that's something that, like I said, I've recently come to
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realize and understand a bit more.
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And I understand why it's so emotionally charged.
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And I think that having conversations and helping those
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non farm heirs kind of find their peace and find their way
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in, you know, passing, passing that down is something that I've
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recently come to learn and, and try to focus my efforts on a bit
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more as I'm going through estate planning.
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Yes, absolutely, Paige. We've talked about so many
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things today as far as like the specifics of land and what that
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looks like in estate planning. If you had one piece of advice
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that if a listener hadn't listened to anything that they
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that we've talked about so far, but you could leave them with
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one thing when it comes to protecting their land, what
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would that piece of advice be today?
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This is going to sound a little bit harsh, but don't assume it
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will all just work itself out, because it won't.
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Don't assume that your children will just all get along and play
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nice because they might not. It won't work itself out and
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they might not play nice. And that is not a knock against
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anyone's families who are listening.
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That is just a fact because I see it over and over again every
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single day. If you want the family land to
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stay in the family, you need a plan and it needs to be in
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writing and it needs to be a legal document.
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The best time to have these conversations is right now,
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while you're healthy, while you're in control, and not
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during a crisis while emotions are high.
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So sit down and start the conversation with your family
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today. Go call an attorney tomorrow to
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help get the ball rolling. You have to plan as if something
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were to happen to you tomorrow. You can't keep saying I'll I'll
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make a trust after I buy that next piece of land that I'm
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looking at or after that, that land auction next month.
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You have to plan today as if something were to happen to you
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tomorrow. And Peace of Mind is really the
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real gift that estate planning gives your family.
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So sit down, have the conversation today, and call
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someone to help you execute that plan tomorrow.
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Amazing. Paige, thank you so much for
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your time and coming on and talking about this topic that
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isn't super fun to sit and talk about.
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Like no one wants to sit here and talk about the possibility
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of them not being here tomorrow. But it's one of those situations
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that it's a lot better, like you said, to talk about it now while
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you're healthy, while emotions aren't high, and while you can
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all just sit around the kitchen table and actually have a
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conversation about it, even if it is uncomfortable, even if
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it's not fun, even if talking about death and talking about
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not being here is a topic that you want to avoid.
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It's a lot easier to talk about it now and figure it all out
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right now than it is to try and deal with probate or try and
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deal with finding all of these other things that we've talked
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about in past podcast. And I think that's what I want
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to leave with listeners today that if you haven't listened to
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Paige's past podcast that we've had her on, she talks about
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wills and trusts and just general estate planning.
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So make sure you go back a little bit or just like search
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page in our podcast and you will come up with all of the podcasts
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that we've had Paige on where she talks about all of these
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things in a lot of detail. So make sure that today you go
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back, listen to those other podcasts and then check out the
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show notes. We've got all of pages links
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link down below where you can get a hold of her and her team.
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If you have any questions or any thoughts or concerns or anything
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like that, that Paige might be able to help answer or just help
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you work through this process and work through this really
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uncomfortable thing with with you and your family.
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So go check out those show notes.
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We've got all of those things linked down below.
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And we've also got a little free guide linked down below that
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pages created where you can get the estate planning process
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kicked off for free without contacting anyone.
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You just got to fill out a little form and they'll e-mail
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it to you and get that over to you as well.
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So check out those show notes. And as always, thank you for
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listening. And we'll see y'all tomorrow on
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another episode of the Cattle USA Daily podcast.
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Have a good one y'all.