The decedent or family member must have participated materially in the farm operation in at least five of the last eight years prior to death. There is an estate tax recapture if the farm is disposed of within ten years after death to nonfamily members or ceases to be used as a farm. There are other alternatives for farm estate tax planning. Another is the 2057 deduction for family owned business. One non-estate tax issue in farm estate planning is intergenerational transfer.
Today there are fewer farmers and farm operations are larger.
One child may want to farm or may be in the family farm operation while other children are nonfarm oriented. Farm estate planning must answer the question about maintaining the farm operation for the farm child while providing estate distribution to the nonfarm children. Another farm estate planning issue is asset ownership. Asset ownership is the first step in any estate planning. Assets can be owned in several ways.