The Importance of a Clear Estate Plan for Distribution of Assets
Each Year Without Estate Planning Hinders Heir
Second generation members of family businesses often face challenges similar to this person. Unequal distribution of assets are often essential to protect and appropriately reward the person who works in the family business. A situation like this is even worse, since it’s really a first generation family business but one owned by the parents. However, thoughtful structuring of this farm operation could result in an arrangement that keeps the property in the family, rewards the actively involved son, and even can provide an income stream to the siblings.
For the involved son, one option he could take would be to get a so-called “second-to-die” life insurance policy on his parents’ lives that will cost less than getting it on just one parent. That sum would allow him to buy out some or all of his siblings in the farm with cash, and it would also be a good solution if the parents were unwilling to do appropriate estate planning. He would want to talk to a life insurance agent about the costs and benefits of the policy to protect his distribution of assets.