For many North Dakota families, the farm, ranch or business is decades of work, and it often pays the family’s bills. Without a plan, it can be hard to keep it running after the owner retires, becomes ill or passes away.
Start with the hard questions
- Who will run things when you step back, and are they ready?
- Should children who work in the business be treated differently from those who don’t?
- Will you need income from the business in retirement?
- What happens if a co-owner dies, divorces or wants out?
Your family may not agree on every answer. Talk it through early, before an illness or a death forces the decision.
Fair isn’t always equal
Splitting land or a business equally among several children can leave no one able to run it. Some families leave the operation to the child who works it and balance things for the others with life insurance, other property or payments over time.
Tools that can help
- A will or trust that says exactly what happens to the business
- A buy-sell agreement among co-owners that sets a price and terms if an owner dies or leaves
- Moving ownership gradually through gifts or sales, which can also use the annual gift exclusion
- Life insurance to provide cash for taxes or debts, or to balance inheritances
- Powers of attorney so someone can keep things running if you’re temporarily unable to
Plan who will run it, too
Make sure the next generation knows the suppliers, lenders, accounts and day-to-day decisions. Write down how things work. An ownership plan only helps if someone can actually keep the doors open.
Revisit it often
Land values, family situations and tax laws change. Look at your succession plan every few years and after any big change.
We help North Dakota families put succession plans in writing and fit them into their overall estate plan. Our estate planning services are provided in North Dakota only. Call us at 703-649-4848.
