Almost everyone is in denial about how they perceive their age vs. their chronological age. That’s not a bad thing – some studies say thinking of yourself as younger than you are helps you stay young.
There should be no denial, though, when it comes to the potential for disability in later years. It’s something that farm families need to plan for given the large assets associated with ag production.
It was also the subject of a recent talk by Attorney Callyn Bedker of Pluto Boes Legal. Bedker spoke at the Central Minnesota Farm Show on planning for the future.
Her philosophy is that disability and farm succession are two topics that go together.
“Planning is important to do because then you can weigh out what happens, what you’re afraid of, what your goals are and actually make that happen,” she said.
Disability and estate planning begin with education and design.
Early in the stages of meetings with clients, Bedker frequently asks what individuals want – when they pass or when they become disabled.
The attorney drafts documents that are signed – but for farm families, estate plans cannot be kept in the family safe deposit box for decades without maintenance.
“I hope to see estate planning plans about five times before an individual passes away,” she said. “You really should be updating it and maintaining it.”
An important step is preparing for mental disability.
Ten percent of the population over age 65 has Alzheimer’s disease, and the approximate lifetime cost of care for an individual living with dementia in 2018 was $341,840, according to the Alzheimer’s Association.
“Disability scares me even more than passing away for farmers, because people don’t understand how large this area is,” she said.
When someone loses the ability to make a decision for themselves, who will make that decision? Who will provide care? A power of attorney document and health care directives allow each individual the opportunity make decisions on their own behalf ahead of time.
The power of attorney needs to be written down with two witnesses or a notary republic. Spouses don’t have an automatic right to make decisions for their incapacitated spouse. Accounts that a spouse has individually kept require a power of attorney for anyone else to access.
The power of attorney becomes ineffective when you pass away, Bedker said.
The health care directive works the same way. Spouses do not have the automatic right to make medical decisions in an emergency. You have to have two witnesses or notarization to elect someone to serve as your health care agent.
“Health care directive is not just about pulling the plug,” she said. “It’s the eye doctor, hearing tests, physicals, flu shots. It’s everything in-between so your healthcare agent should be someone geographically pretty close because they are going to be running you a lot of places.”
If someone doesn’t have a health care directive, and they lose the ability to make decisions for themselves, a health care decision maker is court appointed.
“The state of Minnesota allows for it in case people haven’t got a plan,” she said, “but you don’t want this to be your first choice.”
A financial conservator has another role, she added. For a farmer, someone is needed who understands farming and finances.
When it comes to estate planning, Bedker says one size does not fit all. The document needs to follow the laws for the state where it will be used, and it needs to fit what someone wants and needs.
With changes in the tax code in 2016, taking another look at one’s estate plan is important to make certain it remains comprehensive and adequate.
“You do want to update to make sure that these things make sense in your will or make sense in your trust. Then if you have changes in family or health (then it is fairly easy to make these changes),” she said.
Farm families need to know what their goals are, what they want to control, and what their plans are for living with disabilities. If a spouse is still alive, how will they be cared for? Does the spouse want to farm? If not, then a plan needs to be in place for who will take over the farming operation.
Planning for the future is not something that is done in a day or a week. By studying financial information, working with a trusted lawyer, implementing powers of attorney, health care directives and estate plans, and updating for changes in life and changes in law, families and the farm can remain intact.