Texas Estate Planning Attorney Giving You the Representation You Need Farm and Ranch Estate Planning

Farms and ranches are part of the backbone of Texas economy and culture. The Lone Star State was founded by people who wanted to live on the land and make their own way. This ethos has extended into the 21st century. Many family-owned farms and ranches have been in the same family for centuries. Today, Texas’ farms and ranches not only support the people who run them but provide food and other resources to the rest of America. In 2022, Texas farms and ranches sold $32 billion worth of meat and produce. This means Texas farms and ranches are a big business.

They are also a family concern. As of 2024, 93% of Texas farms and ranches were owned and operated by families. Many of these farms and ranches are generational operations. Most families who currently operate farms in Texas plan on passing down ownership to their children or other relatives. This is why estate planning is vital for farm and ranch owners to protect their assets and family legacies. The land may have sufficient value to trigger federal estate taxes while the family may not have sufficient liquid assets to pay those taxes.

What Is Estate Planning in Texas?

Estate planning is the process of ensuring your assets will be handled accordingly after you are no longer able to make those wishes known yourself. Many people think estate planning is the simple process of drafting a will. A will is only one component of estate planning. Estate planning is a more complex process that takes into account other factors of inheritance. These include:

  • Property and Estate Taxes
  • Powers of Attorney
  • Deeds
  • Trusts
  • LLCs, family limited partnerships, and closed corporations 
  • Medical Directives
  • Self-designation of guardian
  • Agent to control remains and burial or cremation instructions

During estate planning, a person will make several determinations about what will happen to their assets after their death. They will also consider things such as power of attorney and medical directives. These will allow a person’s family members to make important medical and financial decisions should they become incapacitated due to illness or age. If a guardianship should ever become necessary in the future, one can self-designate who should or should not be appointed guardian. 

Another consideration of estate planning are trusts. Trusts allow people to transfer ownership of assets to another person while they are still alive. This person is called a trustee. The trustee will manage and protect your assets. The advantage of this is that you have already placed responsibility for your assets into someone else’s hands while you are still alive but you still maintain the benefits of the assets during your lifetime. This can help ensure your wishes will be carried out as expressed in your trust. 

Another advantage of a trust is that it helps protect certain assets after you die. Having assets in a trust can prevent them from creditors in some cases or from going into probate. If your property goes into probate, it could mean losing your family farm or ranch to estate taxes or estate creditors. A trust can help ensure your assets go to your heirs rather than risk being seized by the government. However, trusts are not the only tool available for this purpose. 

Some families choose to establish an LLC instead of a trust so that rather than one trustee having all the management power and responsibility, the members of the LLC vote on major decisions and distributions. 

What are Some Concerns for Texas Farm and Ranch Owners in Estate Planning?

Because farms and ranches are both large businesses and family property, estate planning can be complex. You will not only be leaving land to your heirs but also financial responsibilities and business assets. These assets can include livestock, farming equipment, and other materials related to the operation of your farm or ranch. If you have multiple heirs, this can be a concern.

If you do not explicitly state your wishes in a will or other document, your property and assets could be divided equally among your children or other heirs. This could be an issue if you want specific heirs inheriting certain aspects of your farm or ranch. For example, if one of your children is more skilled at the operation of a company, you would want to place them in charge of handling your business assets.

Another concern involves considering what kind of possible taxes your heirs may be responsible for. This includes estate taxes, gift taxes, capital gains taxes, generation-skipping taxes, as well as income taxes. Currently in Texas, inheritors must pay what is called an estate tax on any property they receive in a will if the total estate value exceeds a certain threshold amount. This is sometimes known as the “death tax.” Texas farmers and ranchers have been fighting this tax for years because it means potentially passing along debt to their heirs or could have even worse consequences. 

In some instances, heirs may not be able to pay the estate tax. It is not uncommon to be “land-rich but cash-poor.” This could lead to endangering ownership of property that has been in a family for generations. The heirs could be forced to sell the land to pay the taxes. There are ways that you can lessen potential estate taxes. One method for this is to make your farm or ranch an LLC. An LLC is a type of business called a limited liability corporation. An LLC is subject to different laws regarding estate taxes. This could mean lessening the financial burden on your heirs. Often the family dynamics play a major role in determining whether a trust or an LLC would be a better solution. 

These are only a few of the concerns when estate planning for a farm or ranch in Texas. This is why it’s important to begin estate planning early and to consult an experienced attorney when doing so.  It is also important to choose an attorney who will consider all the available options rather than taking a one-size-fits-all approach. If the estate planner you consult only recommends trusts to everyone without examining the whole picture, they may be overlooking a better solution. 

What Should I Do if I’m Estate Planning for my Farm or Ranch in Texas?

Estate planning for farms and ranches in Texas is a complicated process. Often a simple will is not enough to address the complex taxes and inheritance laws involved when a farm or ranch owner dies, even though everyone needs a will at least as a backup safety plan. However relying solely on a will to carry out your wishes can have disastrous results. This is why an attorney experienced in Texas estate law is essential to protect the business and property you’ve worked so hard for. If you or a loved one own a farm or ranch in Texas and want to begin the process of estate planning, don’t hesitate to contact Laura D. Heard Law Firm Inc., located at 14607 San Pedro Ave, Suite 205, Hill Country Village, TX 78232.

We understand the importance of farms and ranches to both the families that own them and the role they play in Texas life. We understand how complicated estate planning can be for these vital institutions. And we also respect your unique family dynamics. Our compassionate, family-oriented attorneys treat every person as an individual and not a case. We work closely with all of our clients to help ensure their wishes will be fulfilled, their property will remain in their families, and their farms will continue to operate for generations to come.

Farms and ranches are a part of the lifeblood of Texas culture and American life. The people who own and operate them deserve our respect and aid. This is especially true when planning for the future. If you or a loved one own a farm or ranch and need to begin estate planning, call Laura D. Heard Law Firm Inc. at 210-775-0353 or contact us for an initial consultation.