Dear Michael: We have a child that is farming and we have two children who are not. We have put aside our savings for years in order to give the farm to our son and provide an inheritance to the other two children.

A good friend of mine, with whom I went to high school, just suffered a stroke. We’ve been friends for years and it breaks my heart to see her at the nursing home. They farm as well, and you can see the financial strain this is putting on them. What will we do if we live long enough to need to use our savings for long-term care? What are the chances we’ll need to do this? We’re just in our 60s! – Same Age As

Dear Same Age As: Unfortunately, once that internal clock turns 55 or so, things start to change.

Human beings seem to wear out their hips, their shoulders, their hearts and their brains – especially the former if you’ve been involved in farming for the past 20 or so years. Farm work is so hard on the body. It’s gotten easier, but those early tweaks and pulls turn into major problems later on.

In your estate, you’ve stated you’ve been putting aside money into savings in order to make certain your son receives the farm. Savings are a great idea – they provide liquid assets if you should need them for anything.

However, you have some needs to address – like how do you protect the family farm and provide an inheritance for your non-farming children. There’s a truism in life – you can’t spend the same dollar twice. I see this quite commonly in planning where someone says “Yes, I have money to pay for long-term care and I’m going to use this money to go our non-farming children.” My answer is always ‘Well, which is it – use for long-term care? Or go to non-farming children? You can’t have it go both ways! If you need care, does that mean the non-farm children will watch their inheritance disappear? Or does the farming child then have to make up the difference?”

It seems like a simple question, yet this is the most unanswered question in estate planning today and maybe one in 100 have it adequately covered where it’s guaranteed.

The solution is simple. Take some of the income you are putting into savings and buy a long-term care policy of at least five years duration. In your 60s, you might find this type of coverage. Just like you insure your crops, your machinery and your buildings for disaster, maybe it’s time to think about insuring your body for disaster, as well. Besides, you don’t want to be a financial and physical burden on your family. If paying premiums bothers you, you can use a return of premium to your heirs or a life insurance benefit of more than your premiums!

Also, at your age, you and your son (he has a vested interest in this, as well) should take a look at insuring yourselves with a second-to-die life insurance policy. The costs on these are 50 to 60 percent of the death benefit if you live to 100. In other words, maximum costs might only be 50 cents per dollar.

When you’re planning an estate, plan it like you do your farm operation. You insure your crops, insure your buildings, insure your machinery, and, for far less costs, you can insure your body in case it breaks down, and insure your son’s future on the family farm.

Who doesn’t like getting things for 50 percent off? You also get tax credits and write-offs.

Michael Baron provides estate planning guidance at Great Plains Diversified Services in Bismarck, North Dakota. Email him at KeeptheFamilyFarm@gmail.com.

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