Estate Planning

1. One common example is family members who jointly own land that is eligible to be enrolled in a Conservation Reserve Program. There is enough land to draw $150,000.00 annually from the program and we assume there are at least three joint owners. If the family members maintain their joint ownership or transfer the land to a general partnership in which each owns an equal share, they will each be able to draw $50,000.00. If, however, this land is placed in an LLC, corporation or trust, the eligibility will reduced to $50,000.00.

2. The simplest example is that of a husband and wife who are farmland owners or farm tenants. If the husband and wife are partners in a general partnership then each will be eligible for a full payment limit for whatever program in which they are participating. If the husband and wife are simply joint landowners, each is eligible for a payment. If, however, the estate planner does away with the general partnership and in its place creates an LLC, corporation or trust in which both the husband and wife have an interest, he has reduced the eligibility of the husband and wife to one payment limit. If he takes land either jointly owned by the spouses, or owned separately by the spouses and places that land in a joint trust, or LLC, or corporation he has reduced the eligibility of the spouses to one payment limit.

3. A third example is two brothers farming in a general partnership. They decide to enroll the land they are farming in CSP. There is enough land enrolled to qualify for an $80,000.00 CSP payment. If they maintain the general partnership, the partnership will receive $80,000.00, if, however, this partnership is replaced with an LLC, corporation or trust, the farming operation will only qualify for $40,000.00.