Any experience with family farms? And the legacy?

[warriorcoach]

Just wondering if any members have any experience or ideas about keeping farms and land in the family.

My family has a farm that has been in the family for many years. I was able to trace some of the land back to the late 1700's. Situation is tht the two uncles that now tend the farm are getting older, one has cancer. There are two other sisters- so 4 kids in all with holdings to the farm. All kids would like to keep the farm in the family. None of the grand kids are involved with the farm. I am one of the grand kids and at a point where I can move to be involved with the operation. I can't buy the farm outright, nor would I know if the family would want that to happen. Part of the farm is crop farming and part is chicken growing (8 houses). I know if it comes down to it, the family could just lease the farm land out and hire someone to manage the chicken operation.

Guess the big question is, does the family set up a corporation or LLC to manage everything and then distribute the profits, like any other business would? Obviously I am green to this- but everyone agrees that they would like to be able to keep the farm in the family instead of selling it off... Any thoughts?


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[dkwolf]

The first idea that comes to mind is a family trust, with you renting the ground from the trust under a cropshare agreement.

I would start with your local university extension (https://extension.umd.edu/); if they can't help they might be able to point you to a good resource. Another option would be a local Farm Bureau office. And of course, a lawyer. Pretty much anything you do (trust, LLC, LLP, etc.) is going to involve a lawyer.

 

[warriorcoach]

No doubt Lawyers will be involved! That's what I was bunking also as far as a corp or LLC. I have also read before about a family "bank". They might be interested in do g that since all of the children with share of the farm have children and grandchildren. Operates like a bank but only for family members to take loans from. Take loans at less interest than banks charge and then the principal and interest are paid back to the family bank.


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[jhoneycutt]

No real help here but I do think it's pretty damned cool that you've got family land from that far back.

 

[warriorcoach]

Thanks. Is pretty neat. I was able to trace the family line back last year to colonial Virginia and then back to England. Was able to see who the first family member was who came to our area and bought land.


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[Owly055]

Probably the most misunderstood dodge is forming a church. You don't have to and don't want to create a 501 C3 nonprofit corporation, just establish a church and everybody donate their share to the church, the family being the membership. You can go through the motions of being a church, announce weekly or monthly, or whatever, "services", which could be nothing more than a "beer social". Doing "good works" is not a bad idea either. If you don't become a non-profit corporation, the IRS can't touch you unless there is gross abuse. The property can be leased to someone to operate the farm, or that someone could be the "manager" of the church property taking his salary out of the proceeds of the farming operation. The benefits to the family members (church members) can be many, including produce, spending time on the farm, even having tax sheltered vacation "cabins" on site. This sort of thing is done by churches all the time. The federal government does NOT have the right to judge what is a legitimate church and what is not. It's called separation of church and state. They CAN examine the books for fraud, such as members or ministers spending church money for personal expenses. You can put together "missions"and travel to interesting places to share your ideas about earth friendly agriculture with the people of Greece, England, France, Hawaii, etc, paid out of church funds. Thus your vacation can be 100% tax deductible by contributing the funds to the church which then sponsors the mission. Founding a church is easy, cheap, and simple. You don't need a lawyer, in fact you don't want one!! A lawyer will inevitably steer you toward establishing a 501 -C3 non profit, which instantly puts you in bed with the IRS. You don't have to fill out forms and applications to be accepted by some bureaucrat. Best of all there is NO TAX.... NONE AT ALL, on the property, once it is property of the church. You can of course ultimately at some point dissolve the church and sell it's assets if you so choose. Income from leasing agricultural property is often quite low, so the benefits can be of far more value than the income. If people are perceptive to recognize that value that is NOT money is actually worth more than money because it is untaxed, this can be a real windfall. I have some further information on this that can be of value written up by a friend who started his own church a number of years ago. Again, the feds cannot define what a church has to be, regulate what it does, tax it or it's property (no local or state property tax either), or govern it in any way. Salaries paid by the church of course are subject to income tax. As a church you are essentially untouchable! Thanks to our constitution. The church motorhome, and the church houseboat, and the church truck, airplane, etc can be used for virtually anything and there is zero requirement of keeping any real documentation on what they are specifically being used for. The government has no authority to demand explanations and justifications.

H.W.

 

[warriorcoach]

Hmmm. Interesting. Something to look into.


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[BHebert]

You need to see how it is done now. There might be a corp or LLC already set up. And the longer you wait, the harder it will be. When the aunts and uncles start dying, you will have to deal with their kids. More people mean more problems. When my wife was selling her grandpa's house, one of her long lost cousins owed some money to a bank and almost screwed up the whole sale. You also need to find out if there is enough profit for you to survive and split up with the family. If you have to pay them first, there might not be enough left for you. Personally, I would rather buy it outright. If you can show the farm has been making money for all those years, you should be able to get a loan on it.

 

[warriorcoach]

Exactly. That's why I am looking in to all of this now.


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[bknifefight]

chicken growing

I have nothing of value to contribute but this made me lol

 

[broadbill]

Probably the most misunderstood dodge is forming a church. You don't have to and don't want to create a 501 C3 nonprofit corporation, just establish a church and everybody donate their share to the church, the family being the membership.......[[[[truncated for clarity]]]

I'm not a tax professional, but this doesn't sound right. I don't think you can claim tax exemption without filing for the 501 C3 non-profit status (or some other protected status) with the IRS. Otherwise, why would most "real" churches and non-profits apply for it if all that was necessary was to exhibit the outward appearance of a church/non-profit (ie. charitable giving, mission trips and the like)?

Also, the "separation of church and state" isn't a provision of the constitution but rather a turn of phrase used by Jefferson to express the intent of what would become the establishment clause of the First Amendment ("Congress shall make no law respecting an establishment of religion. . . .").

 

[jhoneycutt]

I'm not a tax professional, but this doesn't sound right. I don't think you can claim tax exemption without filing for the 501 C3 non-profit status (or some other protected status) with the IRS. Otherwise, why would most "real" churches and non-profits apply for it if all that was necessary was to exhibit the outward appearance of a church/non-profit (ie. charitable giving, mission trips and the like)?

Also, the "separation of church and state" isn't a provision of the constitution but rather a turn of phrase used by Jefferson to express the intent of what would become the establishment clause of the First Amendment ("Congress shall make no law respecting an establishment of religion. . . .").

^ there's an intelligent person right there. OR do they simply have the super power called common sense? At least there's one other person that knows the history and meaning of "separation of church and state".

 

[jhoneycutt]

That's very interesting info. I wish I had been more interested in this stuff when i i i was younger before my older relatives started dying off. I have, however, been able to trace back to the first man on my mothers side to move to Alabama and establish at least that much of my family. He came from Connecticut in 1763. His name escapes me right now though. I also have, beginning with him, a family tree. Its a lot larger than I expected and many members all over the country. I was always unflder the impression that the vast majority of my family lived only in Alabama. Boy was I wrong lol. My FIL also knows a lot about his familys history, including the fact that they are fairly close relatives of the chancellor of Germany in tye 1960s.