Asset-rich, cash-poor: Protecting the family farm from an unexpected tax burden
RON SESSA
When most farmers think about estate planning, the focus is often on avoiding probate and simplifying the transfer of assets to the next generation. While reducing probate costs and administrative delays is important, the greater risk to many family farms may be an unexpected estate tax burden. Without proper planning, families who are land-rich but cashpoor can be forced to sell farmland, equipment, or other assets just to pay taxes and settlement costs, threatening the long-term future of the farm.
Many farming families spend decades reinvesting their earnings back into the operation by purchasing additional acreage, upgrading equipment, improving facilities, etc. That commitment helps preserve the farm’ s long-term success, but it can also unintentionally create a difficult estate planning problem: becoming land rich and cash poor.
Like a strong crop yield with no available storage for reserves, value alone does not solve the problem if there is no liquidity when it is needed most.
At death, taxes and administrative expenses do not wait for favorable market conditions, crop sales, or long-term succession plans. They are generally due
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