How To Keep the Farm or Property “In the Family”
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- Опубликовано: 25 июл 2024
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Many parents who have both children and grandchildren want to keep some of the property that they own so that their kids and grandkids can enjoy the property for many years to come. Perhaps the parents have seen how much their kids and grandkids enjoy the property.
However, when parents pass away and their property is left to children, property rules apply that may conflict with what the parents are trying to accomplish. Customizing the right legal program can ensure that one rogue descendant, or perhaps even the spouse of one child or grandchild, will not be able to mess up or destroy the family property that you'd want them all to enjoy.
First, let's look at some of the laws that apply when multiple owners own real estate in . has a rule that states that no owner can be compelled to own property with another. When children inherit their parents' land, the children are considered "owners in indivision."
Anyone who owns an undivided interest in real estate in , regardless of how big or small their ownership interest, can sell their ownership interest, or can force a "partition" of the property. The two kinds of partition are "partition in kind" and "partition by licitation."
When a piece of property is susceptible to being divided into lots, an owner can force a partition in kind whereby each owner would wind up with their own tract. Or, particularly if property is not susceptible to division into lots, an owner in indivision can force a sale of the property and the proceeds would be distributed to the co-owners in proportion to their ownership interest in the property.
Due to these rights that co-owners have, family property often gets sold eliminating future descedants from being able to enjoy the property.
Some owners of property think that by forming a limited liability company (LLC), the owners can keep the property in the family for generations. While owners of property should consider forming an LLC, and transferring their property to it, this is more of a "protection from lawsuits" vehicle than a "keep it in the family for generations" vehicle. Placing the property in an LLC and leaving membership interests in the LLC to your descendants won't prevent an owner/member from (1) selling or disposing of their LLC interest; (2) a member's creditor seizing their interest; or (3) giving or bequeathing their LLC membership interest to a non-family member.
These conversations about keeping property in the family for generations often turn toward creating a family trust. Parents would name a trustee or co-trustees (perhaps the "responsible" descendant") who will manage the trust assets for the benefit of all of the children and grandchildren. Backup trustees would need to be provided for since this trust may be in existence for many decades. Thanks to trust law, the descendants (trust beneficiaries) would not be permitted to sell, alienate, or mortgage, their interest in the trust, and the creditors of a beneficiary could not seize their interest in the trust.
Other issues to consider before pulling the trigger on something like this include the gift and estate tax, future Medicaid qualification, leaving funds to the trust to provide for ongoing management and expenses, and perhaps having the parents transfer the property (or their LLC which owns the property) to a revocable trust now (which trust would become irrevocable when the parents die) in order to avoid having the property go through a court-supervised probate proceeding when they pass away.
Every set of family circumstances is unique. You likely only have one "shot" to get it right. And the decisions that you make (or don't make) will affect your descendants for many, many years to come.
This post is for informational purposes only and does not provide legal advice. Please do not act or refrain from acting based on anything you read on this site. Using this site or communicating with Rabalais Estate Planning, LLC, through this site does not form an attorney/client relationship.
Paul Rabalais
Estate Planning Attorney
www.RabalaisEstatePlanning.com
Phone: (225) 329-2450
Unfortunately my grandparents are from the Deep South and don’t understand the importance of a will. I’m the only grandchild they have and I’m hoping I can keep the entire 522 acres in my family for the next few generations. It’s in a prime area and abuts to a major river in upstate South Carolina along with a national forest on both sides.
Do your best to convince them!
Sounds like they are Trumpers
Seek out a [al]lodial title / land patent.
You don't own your land unless you trace it back to the original patent.
@@hvacstudent967can this be entered into a trust for further protection?
@@nikkylastephan1168 A trust has three parties, the guarantor, the Trustee and the Beneficiary.
Article one Section 10 of the constitution contract clause, protects contracts, such as trust's.
Seeing as how property can't be in more than one trust at a time it remains the duty of the controller and or the owner to have highest right. That's why I mentioned lodial title. Or said another way, highest claim.
You could also file a UCC-1 (notice) of security interest in said piece of property. Depends on the route you want to take and how literate you are about the legal system.
Control everything, own nothing.
Appreciate your videos. I have used them to open the conversation about important matters. Because everyone is coming from the same base of knowledge, there are more productive conversations and less suspicion and distrust.
The
Great video.
We waited too long and couldn't form a trust because Grandma had been diagnosed with dementia and couldn't legally make decisions or something along those lines. Now my parents are considering using millions of their retirement to buy out the siblings. It's a priceless chunk of land and will continue to appreciate, but that's a considerable amount, almost half, to take out of retirement where it won't be paying dividends. So be sure to do this early on. There's a lot of restrictions on being able to form a trust like this. In Colorado, anyway.
So this is why my aunt was thinking she should steal our dad's interest in our grandfather's farm from my brother and me, having only siblings and no cousins with whom to share it herself. I don't think it matters how difficult she found Dad to grow up with if she’d take out her issue with our grandfather's favoritism on the people for whom the product of that was certainly harder as our parent than as her sibling. I mean the gall to come to his funeral! Of course she needed the alibi I guess. No way is this what our grandfather had in mind.
You are so right that there is one shot to protect one’s wishes, and I think if our grandfather had the benefit of this advice any damage his ruined kids were content to inflict on each other’s children and even their own at least wouldn’t have been so bold as to pull this kind of thing with his property. He wasn’t thinking in a dynastic sort of way with his own estate plan and at least some of that is owing to his own selfish irresponsible favoritism. Their legacies are one of the few exceptions to narcissists’ dangerous shortsightedness and it’s just too bad consideration which would have appealed to his vanity was the kind of thing somebody else would’ve needed to mention and didn’t. Also too bad narcissism doesn’t invalidate a will because unfortunately while I believe one should be free to make disposition of his property however he sees fit everybody who would misuse that freedom for their own abusive cruelty believes the same.
Not even sure why a man who moved to Texas in 1983 and died here in 2016 executes a will in Louisiana anyway unless there’s undue influence considering that farm was his only asset in Louisiana.... Seems like the ancillary probate should be that one and not this one-especially if our farm interest is liquidated to our aunt at some laughable value. It’s preposterous our father didn’t intend that and trusted executor and attorney not to be more interested in whatever our aunt offered to convince them to prepare a will that even explicitly permits trustee commingling. They are so petty and you can see it in each of them my father wanted to teach me a lesson so badly that writing a complicated will exposed him (exposed us. just like a previous one he had written when my brother was still a minor removing references to his third wife-which of course on his death would have gotten us sued) so we’re the ones paying for what comes down to our dad (not unlike his own father) didn’t feel like he shit on enough things we had to clean up while he was alive.. The information specific to Louisiana is particularly helpful, difficult to find, and well-presented, so right on.
Thanks.
To keep in a farm in a trust, does all the family members who are listed have to approve 100% ? And if so does the trustee just keep making any mortgage payments as if the parent deceased has set up? In Michigan
Wish my grandfather had never remarried cause we lost our farm.
Very good advice could you please let us know about more L L C . Thank you
I want to build a investment account with different people as share holders and give them a account to put money in to and buy shares which they must hold for 10, 15, or 20 years before selling. what should I do