Dear Quentin,
I would like your advice on ways that I could structure my will.
We live in Ohio, but I own property in Nebraska that has been in the family for over 100 years. My father farms on it through a life estate, and it is worth roughly $ 200,000. My wife and I have started putting together a will. We have agreed to leave everything to each other. However, I would like to know if there’s a way to leave something to my wife and keep this property in my family. We don’t have any children, but my brother has children.
My brother also owns property adjacent to mine (where my father also has a life estate), but he and his children have not shown much interest in that property. I really wouldn’t want to bypass my wife and give these children the property if they intend to sell it, but it’s difficult to know what they would do. I can understand if they have no desire to move their families there, and it’s not a decision that we can ask them to make.
“‘I would like to leave the land to my wife, but I’m concerned that if she remarries that the land could leave the family.’”
I would like to leave the land to my wife, but I’m concerned that if she remarries that the land could leave the family through her spouse. I could give it to my wife with a life estate, but we both agree that this would need to be changed if we ever did build a house on it. (It wouldn’t be fair to spend our savings on a house that is inherited by my brother’s children if I pass away.)
If I write the will to give her a life estate, I’m also concerned that if we ever did need to sell it while I’m still living, the children might view it as selling their property. Are there other ways to give the land to my wife that reduce the risk of it leaving the family? Some ideas I’ve thought about are giving her a portion of the land and a life estate in the remainder. Another idea was to give her the land with a right of first refusal to the children if she ever decides to sell it.
Protecting My Family’s Heritage
Dear Protecting,
I understand your wish to protect your family’s land, given that it’s been in your family’s possession for 100 years.
No doubt, the land comes with memories, a feeling of continuing a tradition and a sense of pride. It’s tricky dealing with a piece of land that goes back generations, and no doubt your wife sees its historical significance in your family. One word of caution: there are no guarantees when it comes to a family inheritance. Your nieces and/or nephews may also sell the land, if they see more value in the monetary value and want to cash out.
A revocable trust is the most straightforward way of leaving the land to your wife for her lifetime, so she can still earn an income from the land. A trust will help you avoid probate for this piece of land, and reduce estate taxes. With a revocable trust, you can — as the grantor — change the terms at any time. (An irrevocable trust, as its name suggests, is permanent and cannot be changed.) You can read about the types of trusts here.
Linda Farinola, president of New Jersey–based Princeton Financial Group, says a trust makes “perfect sense” here. “With a trust, he has a lot of flexibility to name beneficiaries, successor trustees etc. You can have your wife as a partial beneficiary if you like.” However, she says that the property may be worth more if it’s part of the larger family plot and, assuming your wife doesn’t live in Nebraska, she may not want to manage this land out-of-state.
“‘Ultimately, you want to do what’s best for the land and the people in that area, in addition to honoring your family’s legacy.’”
Ultimately, you want to do what’s best for the land and the people in that area, in addition to honoring your family’s legacy. Sometimes, releasing the land is the answer. Other times, holding on to the land and working it farmland to produce an income and local employment is the answer.
This Department of Agriculture report on absentee landlords last year said: “Absent landlords have the potential to alter observed outcomes in agricultural real-estate markets, rural employment markets, and engagement in conservation practices, given that the incentives they face may differ from operating or local non-operator landlords”
“We find that a greater prevalence of absent landlords is associated with lower rental rates and land values at the state level, and there is no association with recent changes in rents or land values,” it added. “Also, while we find mixed results with respect to investments in soil quality, we do find evidence that the prevalence of absent landlords is associated with declining local employment rates.”
You are taking the right steps by talking to your wife now and, as always, consult an estate attorney before making any final decisions.
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