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Is a land trust right for you and your farm?

On Behalf of | Jan 9, 2024 | Farmers and Landowners

Independent farms in North Carolina are often a family endeavor. The farm owner may have inherited or purchased their land from their parents or grandparents. They may want to pass it on to their children when they retire or die.

Keeping the farm in the family can be a legacy and even part of their personal identity. Unfortunately, any real property that people own is potentially vulnerable to issues ranging from debt collection efforts to divorce to requiring eventual nursing home care. A land trust is a potential solution for those concerned about protecting a North Carolina farm.

Why are farms vulnerable?

Farms owned by an individual are at risk of collection activity or liquidation during a divorce. A married farm owner often invests marital income in the maintenance of their farm, potentially putting it at risk of division if they divorce in the future. Moving the property into a land trust helps protect against claims of commingling that could lead to the loss of a farm that has been in their family for generations.

The farm could also be vulnerable if a farmer has a few bad seasons, as creditors might try to place a lien against the property. Even personal financial issues unrelated to the farm itself, like major medical debts, could lead to a lien against the property.

Finally, as farmers age, they may require Medicaid benefits or nursing home care. Farmers may be at risk of losing the farm to afford care in a nursing home long term. Further, Medicaid could make a claim against their estate when they die that could force the family to sell or at least refinance the farmland.

What a land trust can do

A land trust helps protect against all of these challenges by changing the owner of record for the property. Provided that someone establishes the trust before facing any one of these potential issues, they can even avoid legal action that could put their ownership of the farm at risk in the future.

A land trust can ideally preserve farmland for multiple generations from a variety of challenges. The sooner farm owners take action to protect the property that matters so much to them and their families, the less likely they are to face the loss of their farmland if they encounter certain issues in the future.

Learning more about different types of trusts, and seeking legal guidance accordingly, can help farmers and their families decide if a land trust is the right option for their property.