The Goal
Ensuring the Farm Stays in the Family
The family’s top priority was crystal clear—keep the farm in the family for generations to come. With a long-standing legacy in agriculture, they wanted to ensure their children—especially those actively farming—had the opportunity to continue the operation.
Creating Rental Assurance for Farming Heirs
They sought a structure that gave their farming children dependable access to the land through rental agreements, ensuring stability for the operation without leaving non-farming heirs behind.
Minimizing the Estate Tax Burden
The family also aimed to reduce the financial strain their children could face through estate taxes and probate fees. They had taken steps with life insurance but knew it wouldn’t be enough to cover the entire liability.
The Challenge
Balancing On-Farm and Off-Farm Heirs
With six children—three involved in the farm and three off the farm—fairness felt complicated. The family struggled with how to divide assets equitably, recognizing that “equal” and “fair” often aren’t the same in farming transitions.
Unequal Access to Family Resources
Among the farming children, the oldest had received greater benefit from shared family assets over time. This created tension and raised questions of how to level the playing field as part of the transition.
High Estate Tax Exposure and Limited Liquidity
Most of the family’s net worth was tied up in farm real estate, leaving limited liquid assets to balance distributions. A local attorney projected a $1.5 million federal estate tax liability—an amount that threatened both the farm’s financial security and family harmony.
Existing Life Insurance Was Not Enough
Though the family had life insurance in place, it was only a partial solution. They needed a more comprehensive strategy to preserve both the operation and family relationships.
The Recommendations
At UnCommon Farms, we believe that legacy is more than land—it’s about preserving relationships, values, and a shared sense of purpose. Our recommendations were built around those principles.
Restructure Real Estate into a Family Land Entity
We recommended transitioning personally owned farm ground into a family-owned entity—such as a partnership or LLC. This structure would serve as a tool to formalize ownership, promote continuity, and streamline decision-making.
Include Farm Continuation Provisions in the Operating Agreement
The family entity’s operating agreement would contain specific provisions to:- Keep the farm in the family
- Ensure the farming children have clear and secure rental opportunities
- Outline expectations for land use, decision rights, and dispute resolution
Take Advantage of Valuation Discounts Recognized by the IRS
By holding land inside a closely-held entity, the family became eligible for IRS-recognized valuation discounts. These discounts reflect the fact that fractional interests in a partnership are less marketable than full ownership of land, effectively lowering the taxable value of the estate.
Significantly Reduce Estate Tax Exposure
This structure helped reduce the size of the estate, decreasing the projected estate tax liability and preserving more of the life insurance proceeds for their intended purpose—supporting the next generation.
Establish Clear Family Policies on Asset Use and Roles
To address the concerns around unequal access and future expectations, we guided the family in crafting a shared policy for:- Use of farm assets
- Compensation and employment practices
- Governance and decision-making processes
This created clarity among all heirs and laid a foundation for future collaboration, not conflict.
This case reflects the heart of UnCommon Farms’ mission—helping families make decisions today that will serve generations tomorrow. By addressing tax risk, clarifying roles, and creating fair structures for land use, this family didn’t just plan for succession—they planned for continued legacy.
