JohnAlanCohan@aol.com 310.278.0203 Probate/Conservatorships IRS Audits IRS Collection IRS Appeals U.S. Tax Court IRS Criminal Investigation Tax Litigation Tax Opinion Letters Business Plans Aviation Law Tax Exempt/Nonprofit Organizations All aspects of equine and livestock law, particularly tax matters, syndications, business plans, tax opinion letters, and drafting of business documents.		Wills for Business and Farm Owners by John Alan Cohan, Attorney at Law One area of concern for people, particularly those who own an ongoing business, ranch or farm, pertains to the continuation of business without interruption in the event a key member of the family or management team should die. Because of complications that can arise, it is important to insure that proper legal procedures are in place--a Will, suitable clauses in a partnership agreement, and other devices to insure that the activity will remain viable despite the circumstances. In most instances, the owner should have a Will which covers the continuation of the business, funding of the activity, and designation of the people who would have a continued role in the enterprise. Attorneys must review numerous tax and nontax considerations with their clients when creating an estate plan in order to obtain the optimum plan. And where the client has time constraints or is in declining health, it is always most expedient to implement a Will, for a great deal more paperwork and administrative followup are required with setting up a living trust. Quite often the implementation of a simple Will is neglected until it is too late to protect one’s farm. If you die without a Will, state law determines who gets your estate. If you have no living relatives, the state gets everything you own. Friends, charities and others who are not relatives won’t inherit anything if you die without a Will. The only way to insure that your farm or ranch will be transferred on death in accordance with your expectations and will remain in operation, is to have a properly drafted and executed Will or living trust. A Will does not have to be complex, and frequently it can be simple, brief and to the point. Wills constitute the most important yet least costly legal document you may ever have. Living trusts are often favored by ranchers because this procedure avoids probate court and is difficult or impossible for relatives to contest in court. A living trust is a private instrument giving your successor trustee (usually your spouse or key manager or other principal heir) the immediate right to have access to and control over your property. In several states a Statutory Will form is available that provides more choices to the user while simplicity. The form is as simple as possible, and is designed with the understanding that a lawyer would probably not be looking over the user’s shoulder to answer questions. I was surprised to learn that some attorneys who are inexperienced in estate planning use the form as a guide for themselves. Such forms are available in the larger stationery stores. An alarming number of Wills, however, are legally defective for one reason or another, particularly those that are not drafted and executed in the supervision of an attorney. One of the main problems pertains to Wills that are not signed and witnessed correctly, as strict statutory formality must be observed. With a Will or living trust is it essential to name a trusted person as your executor or successor trustee. That person is usually a principal heir. He or she is given very broad rights, and considerable problems could arise if that person turns out to be untrustworthy. Certain items of property, such as a home held in joint tenancy, cannot be disposed of by Will. Also, life insurance proceeds normally are distributed automatically pursuant to the beneficiary designation on the policy. For many farmers joint tenancy is not the proper way to own property for various tax and nontax reasons. The entire joint tenancy property can be subject to creditors’ claims, alimony payments, child support payments, or tax liens of one joint tenant, tying up the entire property. In most situations is it prudent to have an attorney experienced in estate planning draw up your Will. Back to Top