As I reflect on the numerous families I have visited with in my practice, I can see that the challenges in the agricultural world extend far beyond the weather and markets. Many families struggle with the complexity of preserving the family heritage while keeping the farming operation going, all within the framework of fairness for all the children.

Many farmers also face the challenge of debt management. It seems that very few get completely out from under the debt. There will always be more machinery to buy, potential land acquisitions, or a bad year in which we’re thankful for a line of credit to absorb the shortfall.

One planning technique used frequently to help alleviate the debt or to finance a buy-out if there is a farming heir is life insurance. Life insurance can be owned outside the estate in certain irrevocable trusts which are managed by the kids (or someone other than the insured), giving it a much preferred status in terms of how it can be used to pay down liabilities, loaned to the estate to pay estate taxes, or distributed to equalize an estate between farming and non-farming children.

I do not sell life insurance, so I make this next statement without bias: I see how hard people work to keep their farming operations viable, and do not understand why they would not insure against an event that will certainly happen. I know a lot of farmers feel they do not have a cash flow to pay the insurance premium. But I would ask them this: isn’t it worth the additional cost to protect what you have built?

So, too, with estate planning, an area in which I do have a certain bias. I see people work so hard to build, grow, and cultivate a successful farming operation, but yet fail to have an estate plan in place, or they utilize basic, simplistic, traditional estate planning which most likely will be unworkable for the farming operation. Successful farming operations, not to mention families, are often divided and destroyed because time and resources were not spent on putting a plan in place that would accomplish the goals of preserving family heritage, providing clarity, and achieving fairness for the entire family.

Farmers are resilient. They face challenges as unpredictable as weather and markets. I encourage all farmers to look at the certainties of the future – death and taxes – and take steps now to protect their family and farming operations. Take the first step to call a qualified estate planning attorney who is familiar with the special needs of farmers.