Estate Planning in Omaha, NE

Estate Planning Law Group of Blazek & Gregg – Estate and Business Planning Attorneys Serving Nebraska & Iowa

Estate Planning for Families in OmahaBlazek and Gregg — Effective Planning Made Easy

Saving the Family Farm with a Limited Liability Company

For most families in Agribusiness, their land represents many years of dreams, high risk, and hard work. To them, the land is more than an asset; it is a way of life. They are keenly interested in transferring their land to their loved ones without losing any of it to pay estate taxes.

After creation of Revocable Living Trusts to properly use available estate tax exemptions, one of the strategies that can help keep the farm in the family is a Family Farm Limited Liability Company. Nebraska has adopted the Limited Liability Company Act, which allows individuals to form Limited Liability Companies (LLCs) in Nebraska. A Family LLC is simply an LLC where all members are in the same family.

With this strategy, families in Nebraska can form an LLC and contribute their farm land to the LLC as a capital investment. Individuals who contribute assets to the LLC become members of the LLC. The members are the investors.

LLCs in Nebraska can be managed either by one or more Managers or all of the members of the LLC. Frequently Dad is the manager for life and then Mom takes over as Manager for the remainder of her life, but one or more children can be Managers as well. This allows parents to control the farm operation for as long as they wish.

Now let's save estate taxes. The LLC can help eliminate or substantially reduce estate tax by giving Dad and Mom the ability to make yearly gifts to their children to reduce the size of their estate. Some estate taxes are based on the value of your estate at death. Giving away value during your lifetime will reduce your estate and, therefore, the estate tax. Frequently, Ag families want to make gifts to their children, but cannot do so because their ready cash needs to be invested back into their farm operation. With the LLC, the parents can make annual gifts of their membership interests int he LLC to their children, thereby reducing the size of their estate subject to estate tax at their death.

During the entire gifting process, Dad can remain as Manager of the operation, to make sure things are done his way.

I recently called the FSA office in Colfax County, Nebraska, and was told that many farm families are using LLCs and that this strategy causes no problem with the Farm Service Agency.

The LLC is one of the many strategies that are available to farm families to keep their land in their family for generations to come.

With high land prices and the high taxes we all face, it is essential for farm families to make sure they have done "proper" estate planning.

If you would like a no-cost consultation to discuss the strategies that are right for you, please call our office, or to learn more about farm saving, please visit our Farm Saver Estate Planning site.