Ohio Estate Planning: Agricultural Land and Conservation
Jan 20, 2024
Ohio Estate Planning: Agricultural Land and Conservation Strategies
Ohio families with agricultural land face unique estate planning challenges, especially when it comes to conservation and passing the farm to the next generation. Careful planning can help protect your legacy, minimize taxes, and ensure your land remains productive for years to come.
Ohio Agricultural Challenges
Agricultural land succession: Multi-generational farm planning is essential. Without a clear succession plan, family farms can be lost or divided, making it difficult to maintain operations. Consider who will manage the farm, how assets will be divided, and how to address the interests of family members who may not want to farm.
Conservation planning: Ohio offers several conservation programs, such as the Agricultural Easement Purchase Program (AEPP) and local land trusts, which can help preserve farmland for future generations. These programs may provide financial incentives for landowners who commit to keeping their land in agricultural use.
Corn and soybean industries: As major contributors to Ohio’s economy, these industries require careful business succession planning. This includes structuring ownership, management, and transfer of business interests to ensure continuity and avoid disputes.
Water rights: Ohio’s water rights system is based on the reasonable use doctrine. Water access and usage can be a significant issue for agricultural operations, so it’s important to address these rights in your estate plan, especially if your land includes ponds, streams, or irrigation systems.
Ohio-Specific Planning Tools
Family limited partnerships (FLPs): FLPs can be used to transfer ownership gradually to the next generation while maintaining control and potentially reducing estate taxes. They also help protect assets from creditors and can simplify management decisions.
Conservation easements: Placing a conservation easement on your land can permanently restrict non-agricultural development, preserving farmland and potentially providing federal and state tax benefits. However, easements are permanent and may affect land value and future flexibility, so it’s important to fully understand the implications before proceeding.
Current use valuation (CAUV): Ohio’s Current Agricultural Use Value program allows qualifying farmland to be taxed based on its agricultural value rather than market value, resulting in significant property tax savings. To maintain CAUV status, the land must continue to be used for agriculture, and changes in use can trigger tax recoupment.
Agricultural Succession Planning
Family business succession: A written succession plan can clarify roles, set expectations, and reduce family conflict. Consider using buy-sell agreements, life insurance, and trusts to facilitate a smooth transition.
Land conservation: Working with Ohio land trusts or government agencies can help you access conservation programs and ensure your land remains protected. These organizations can also provide guidance on available grants and technical assistance.
Estate tax minimization: Proper valuation of agricultural property, use of trusts, and gifting strategies can help reduce or eliminate estate taxes. The federal estate tax exemption is high, but Ohio does not currently have a state estate tax. However, tax laws can change, so regular review of your plan is important.
Ohio’s agricultural land requires specialized estate planning for both conservation and succession. By using the right tools and strategies, you can protect your family’s legacy and the land you love.
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Disclaimer: This blog post provides general information for educational purposes only. It is not legal advice. Estate planning outcomes can vary based on your personal circumstances and the evidence available. Always review your options carefully and consider your unique situation before making decisions.