Planning isn’t just for the Elderly

Most times we believe that estate and succession planning process only focuses on older generations, perhaps because individuals that have the most assets to plan for, are ageing and/or have health issues.

However, planning is just as important for the younger generation who are young as well. Let’s take farmers or agriculture for example.

Farming and agriculture is considered one of the most dangerous industries for workplace injuries and fatalities. In 2020, the rate of workplace fatalities in farming, as documented by the National Safety Council, was 22.8 per 100,000 workers….this does not account for injuries on the job. Almost everyone in agriculture can probably think of a friend, family member, or acquaintance whose life has been affected by a farm accident.

Grain bins, power take-offs, anhydrous ammonia, manure pits, augers, electrical connections, roadways – farmers are no strangers to the dangers of agriculture. Farm and agribusinesses take many precautions on the farm to prevent and prepare for the worst—an updated estate and succession plan should be one of them.

What happens legally when tragedy does strike? Who has access to the bank accounts and checkbook? Who can make medical decisions? Estate and succession planning for a young farmer may not be as complex as the older generation’s plan, but having documents in place can help ease the burden by making these decisions and arrangements ahead of time.

There are a few basic documents I especially recommend for a young person’s (or farmer, in particular) estate plan, including:

Financial Power of Attorney
Healthcare Power of Attorney
HIPAA Authorization
A basic estate plan

The first three documents are what I call “in case of emergency” documents. The financial and healthcare powers of attorney allow you to appoint an individual or individuals to make financial and healthcare decisions on your behalf. These may be immediately effective or can be set up to become effective upon your incapacitation or disability. A HIPAA authorization authorizes a healthcare provider to share healthcare information to the named individual or individuals. Without these documents, following an accident, your family may need to go to the court to request a guardian be appointed to make these decisions.

In addition, younger people may want to consider a basic estate plan. A young farmer’s estate plan may take into consideration the following:

Who will state law pass my assets to if I don’t have a plan? (Spouse, children, parents, etc.)
Is this who I want my assets to go to? For example, in a multi-generational farm family working to transfer assets to the younger generation, it may be beneficial for an adult child who is unmarried and has no children to consider whether those assets should transfer back to his or her parents or whether they should go to a sibling or other individual or entity in case of his or her death (to eliminate the number of times they may pass through probate or be potentially subject to estate tax).
Am I comfortable with my assets going through the public probate process and paying the related fees?
Are there any related tax consequences?
If he or she has children, ideally, who would care for the children and any assets they receive?

Estate and succession plans can and likely will change over the course of a person’s lifetime as assets increase, new people enter your life, and goals change. Starting early allows young farmers…and people in general… to build upwards with their plan and with an advisor that gains an understanding of the operation and dynamics as they grow.

Key Takeaways:

Powers of attorney and HIPAA authorizations can allow a trusted individual to manage your financial and healthcare decisions if you are incapacitated. This can be important for avoiding court guardianship proceedings during an already challenging time.
Your estate and succession plan might be part of your family or farm’s larger plan.
It’s okay to start early with a simple plan and allow the plan to grow and change as you, your family, and your operation do.