Here at the Northern California Center for Estate Planning and Elder Law, we take our commitment to our neighbors in Lincoln, California to heart. With its abundant resources and diversified economy, Lincoln has put itself on the map.
The History of Lincoln, CA
Beginning with the native Nisenan tribe, a branch of the Maidu Indians, the City of Lincoln started as a large village with lush hills and plains and a wealth of natural resources. Then, with the discovery of gold in the Sierra Nevada, the Easterners rushed to Lincoln in search of treasure and wealth. In 1859, unsettled Lincoln took its place on the map.
A young railroad engineer saw a vision for Lincoln after surveying the area for the Sacramento Valley Railroad. Theodore D. Judah, who held the title to the land, held on as long as he could awaiting the planned railroad. But lack of funding halted construction and Judah sold the property to the president of the railroad. It was Charles Lincoln Wilson who eventually mapped out the town and sold the land to prospective residents. When the railroad was completed on October 31, 1861, it had an immediate impact on Lincoln’s economy.
As people began to arrive in Lincoln, passing through on the rail, extensive layovers meant for a wealth of customers leading to an economic boom for local hotels, restaurants and shops. However, this initial boom in the economy was short-lived. Yet, after the Civil War, veterans started to relocate to Lincoln in search of productive farmland. By the late 1800s, fruit packing plants emerged in Lincoln, bringing with it numerous jobs that sustained the town for more than 50 years. J. Parker Whitney, owner of Spring Valley Ranch, was once the richest man in Placer County. He developed Lincoln’s Twelve Bridges, a planned community. Whitney’s ranch was versatile, with horse breeding, wool production and growing raisins.
We are here to serve our neighbors in Lincoln
A major concern for families owning farms is protecting those investments so the farm can successfully transition from one generation to the next. Believe it or not, nearly 70 percent of family businesses are unable to survive the generational transfer. Usually that is because of estate taxes and probate fees. Protecting your family farm is very important. Estate planning, along with business succession planning, the most efficient way to accomplish that.
Many farms are considered “land rich” but “cash poor.” This means that farms typically have all of their cash tied up in buildings, equipment, livestock and the land itself. However, they often have very little, if any, cash on hand. The farm’s net worth may be substantial. With estate taxes being determined by the current market value of the farm’s assets, your heirs may be required to come up with the cash required to pay estate taxes if they have no cash in hand. As the value of the farm is tied up in tangible assets, your family may be required to sell resources, or the farm itself, in order to pay the taxes and settle all other estate costs when you die. With an appropriate estate plan these types of issues can be addressed.
Estate planning for family-owned farms
There are basically two common estate planning challenges for family-owned farms: (1) how to preserve the farming business so it can be successfully transferred to the next generation while remaining intact, and (2) how to distribute the interests in the farm among the heirs fairly. Meeting these two challenges means you must plan ahead for estate taxes and employing the right tactics to provide maximum control over when, how and to whom ownership of the farm will be transferred.
Let us help with farm succession planning
A succession plan requires designating the family successors as managers and owners of the farm. It also requires determining whether any additional support for the successors will be required from other family members. The specific roles of other family members, whether they are active with the farm or not, need to also be identified.
An efficient succession plan is necessary for a family farm to transfer completely to the next generation. The plan must provide financial independence for the owners when they retire, in addition to keeping the farm in a position for continued growth and success. The succession planning process requires creating goals and objectives for the farm, establishing an appropriate decision-making process, and estate planning for the owners as well.
If you have questions regarding farm succession planning, or any other estate planning needs, contact the Northern California Center for Estate Planning and Elder Law for a consultation, either online or by calling us at (916) 437-3500.
