Not an easy topic, I know.
Unfortunately, I know because I've been through it. I know what we did right and I know what we did wrong when it came to inheriting our homestead from my Dad. And it's so much more than simply visiting a lawyer to write up a will (although, of course, that's an important part). There's a lot that we never thought of getting straight beforehand that came back to haunt us with time, money, and heartache during a period that was hard enough already.
Our family farm has been in the family for 234 years. The farmhouse was built in 1780 right after our ancestor returned from fighting as a Minute Man in the Revolutionary War. It was important that the old homestead continued to stay in the family. When my grandparents lived here, it went through stages of being a dairy farm, tobacco farm, and bakery, always with a large garden and various farm animals. My Dad continued with a maple syrup business, horses, chickens, and cattle. In his late 50's, he developed cancer and was gone by the age of 62. He had a recent will drawn up, made me executrix, and gave me health care power of attorney. We had discussed his wishes. He even left me with a heart-felt letter and a notebook full of important information regarding the property. With his health failing, we thought everything was in order. Here are the lessons we learned.
e Go to an estate attorney and write up a will.
Decide on who will inherit what and be specific. Never put off decisions on inheritance by saying "we'll figure it out when the time comes". A will can always be changed later on if your wishes change, but don't put the burden on family to make important decisions after a death. Discuss with your attorney the best way to pass a property onto someone else: either through gifting or inheritance. Inheritance and gifting taxes vary by state and even by the year, so there isn't one best answer to this.
e Discuss the will with family and other inheritors so there won't be surprises or conflicts.
The executor should have a photocopy of the will and other documents and know where the original is located (usually in a vault at an attorney's office).
e Consider a revocable trust.
A revocable trust is used in conjunction with a will so that inheritance can be dispersed more quickly and easily by bypassing probate. It does not change anything in the will and can still be modified if your wishes change. An estate attorney can create a revocable trust.
My Dad never got around to doing the revocable trust. Going through probate wound up being extremely expensive, time-consuming, complicated, and it took 18 months to finally get the estate settled. The process made a difficult time so much harder on all of us.
e Talk to an accountant who specializes in farms.
Ask for references from other farmers. Not all accountants are knowledgeable about farms, farm businesses/taxes, and inheriting a farm. We were lucky to get connected with an accountant who gave us invaluable advice about forming a farm business, saving on taxes, and finding government farm and environmental grants. Plus, he gave us guidance on inheritance and taxes. Make an appointment to just sit down and discuss the direction of your farm, finances, how to save money on taxes, and how to prepare for future inheritances. And make your initial "planning" appointment before tax season so there is plenty of time to discuss and prepare.
e Get organized and keep it in a safe.
I naively assumed that having a copy of Dad's will was enough. No, it certainly was not. The days after his passing I had to start going through his desk and safes to find a variety of papers I needed for probate and to assume control of accounts. The disorganization and uncertainty was extremely stressful, to say the least, as well as time-consuming. I filled tote bags full of any papers I could find, brought them home, and spent hours upon hours sorting and organizing. There were bank accounts which had been closed, banks that had gone out of business, and stocks which had merged... all which I had to spend hours researching. It was like piecing together a jig-saw puzzle with tiny scraps of information here and there.
e Keep these important papers together in a safe.
Check that all statements have account numbers, addresses, phone numbers, and website log-in information so that the executor can easily access accounts. (For statements like credit card, bank, utility, etc., you don't need the most recent copy: the important thing is to be sure account information is current.)
- a bank statement from each account
- a statement for every credit card, utility, etc.
- stock certificates or statements
- statements from all retirement accounts including pensions, IRAs, 401k, 403b, social security, etc.
- life insurance policies
- copies of property deeds and land surveys
- copies of will, revocable trust, health care power of attorney, and other legal documents
- contact info for estate attorney (including attorney who has the original, signed will)
- titles to vehicles
- homeowner's insurance policy
- insurance documents for vehicles
- contact info for veterinarians; breed registration certificates and bill-of-sales for animals
- tax documents for last 2 years
- names and contact info for family members and friends
- social security number
- photos of valuable items for insurance purposes: farm equipment, tools, tractors, etc. (this is more in case of a loss, but important to keep in the safe)
- the executor should have the key/combination to the safe and know where it is
- if accounts are online, print out statements to keep in the safe
- write as much important account information as possible on statements
- keep an updated "quick-reference sheet" with a list of all accounts, account numbers, and social security number
e The executor should be familiar with the finances and accounts. I was really surprised that papers and accounts were not in better order. My Dad had a long career in the IRS/accounting and his finances had been well-organized during most of his lifetime. I think his ability to get financial information organized was limited as he became sicker. That leads to my next point: if a family member is ill and having trouble with finances, the executor should assist so they are familiar with everything.
e Make sure all animals will have a good, permanent home. As an animal-lover, there was no question that I would care for the animals. However, when I worked for the Humane Society, it broke my heart when I saw wonderful pets being brought into the shelter because the owner died. Talk about who can and will give animals permanent homes and make definite plans in writing. Consider leaving money to those people, in a will, for animal care. It's possible to also set up a type of "trust fund" for pets so there will be money for their care.
e Consider long-term care insurance, if possible.
Going into a nursing home can wipe out a lifetime of savings and possibly put the homestead in jeopardy.
e Keep a notebook of important and helpful information about the property.
My Dad had kept a small notebook and filled it with important information about the property and how things worked. It was full of things I would not have known, like how to turn on the gravity-fed well in case of a power outage, where to shut off power to the barn, and maps of the septic and wells. There was advice, like "be careful of fire in the barn because it will go up like a match", and "don't throw out old tractor parts because they're hard to find". It may sound silly, but right after his death these papers meant a lot to me; it felt like a little bit of reassurance that I could pull things together during a devastating time.
e Have copies of all relevant land records.
When the first town property tax bill came after my Dad's passing, I was surprised to find a tax bill for a small adjacent piece of land which I didn't know was owned by us. I was sure there was a mistake because I should have known about it. But there it was. I spent multiple days going through two centuries of land records, deeds, transfers, sales, and surveys in the town hall. I drew up my own maps of our property and surrounding properties in order to get a sense of how the properties were transferred over time. Now, it was much more confusing than it sounds. Before modern survey methods, parcels of land were written up as "bounded by a stone wall, hence over to that old red maple, up to the Miller's fence, 100 feet more or less to the large rock, and bounded by the property once owned by a said Mr. Smith". And then properties were split, merged, and changed dimensions. I had to hire a title search expert. Then, I had to hire a surveyor to survey the entire 80 acre farm. In the end, the adjacent property did not belong to us and it was a 50-year-old clerical error after a property sale.
Keep copies of all land records and know exactly what is included in the property, especially if the homestead has been in the family a long time. It took me many hours in town hall to locate the records I needed. One important piece had been misfiled decades ago and I never would have found it if I had not known it existed, somewhere.
e Don't put it off. Make appointments and get started now. Make the tough decisions, even if you may change them later on. Spend a day getting all of your papers in order and filed into a safe.
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