28 NEBRASKA CATTLEMAN October 2024 Estate and Succession Planning ANTHONY AERTS & SPENCER HARTMAN | AGRICULTURE PRACTICE GROUP | REMBOLT LUDTKE LLP | LINCOLN Cattlemen face unique challenges as they transition ownership and management of their operations from one generation to the next. Who is interested in taking over? How will family members who aren’t involved in the operation be treated? How will assets be valued and divided? What is needed to accomplish these goals? Succession planning is an opportunity to work through these questions in advance and put documents in place, specifying how assets will be managed and transferred to your beneficiaries. By proactively addressing potential challenges, you can retain control over the transfer of your assets and maintain stability within your operation. C E The first step in planning for the future of your operation is to have intentional conversations with family members and advisors. If you do not have an estate plan in place upon your death, your assets will pass according to the state’s “intestacy laws.” In Nebraska, if you are married and die without a will, the distribution of your assets will depend on whether you have living children. If you do, your spouse will not receive the entirety of your estate, as your children may receive a portion of the value. Although it can be uncomfortable to discuss and plan for change and death, we find that the following questions and considerations provide a useful starting point: W S I W If you are married, what should your spouse receive? In some situations, the operation has been built through the joint efforts of both spouses and it would be appropriate to leave the entire operation outright to your spouse. In other situations, assets are primarily passed down through family lines of one spouse, and it may be appropriate to hold some assets in trust for the benefit of your spouse, but ultimately direct the assets to children. Should your children share equally in your estate? Oftentimes, one or more children may have contributed to the “sweat equity” of the operation, and you may have benefited from their labor. On the other hand, if children who did not come back to the operation receive “pennies on the dollar” as their inheritance, is that equitable? Do you need life insurance to replace income that may be relied on by beneficiaries, or as a means of “equalizing” heirs who may not be receiving business assets upon your death? Should certain children have the right to operate and maintain control of the enterprise while other heirs receive a passive interest in the financial benefits of the operation? T P The solutions to the previous questions can be effectively managed with a Trust Agreement. There is great flexibility in the type and number of conditions that can be placed on assets as they flow through a trust. For instance, a trust can provide beneficiaries with the option to purchase property at a designated amount or require them to reach a certain age before assets are distributed to them. O E In addition to trust planning, many families utilize one or more business entities (limited liability companies, etc.) to facilitate the transfer of an operation. Entities allow an active operator to gradually increase the next generation’s ownership rights over time while maintaining control. Entities are also an CONTINUED ON PAGE 30 PERSPECTIVES
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