Carol Sanders | School of Agriculture, Fisheries and Human Sciences
PINE BLUFF, Ark. – Many farms in Arkansas are sitting idle because heirs cannot agree on who should farm the property, how the land should be farmed or what the financial return to heirs should be, says Dr. David Fernandez, Cooperative Extension Program livestock specialist at the University of Arkansas at Pine Bluff.
With more than half of Arkansas farmers over age 55, now is the time for ranchers to plan their legacies, says Dr. Fernandez, a small, part-time rancher himself. Some 86 percent of Arkansas farmers are sole proprietors (not a LLC, S or C corporation) and the “company” dies with them. No transactions can be completed until after the estate has been settled and creditors’ claims satisfied. Partnerships face a similar problem.
Once the debts are satisfied, what’s left passes to heirs, says Fernandez, but who are the heirs? According to Arkansas State Code (A.C.A. & 28-9-214), your children, not your surviving spouse, are your heirs first. If you have no children and have been married for three or more years, your spouse is your heir. If you have been married less than three years, your spouse gets half, and your parents get the other half. If your parents are deceased, their half goes to your siblings. (For complete details, see A.C.A. & 28-9-214 which is available at http://www.lexisnexis.com/hottopics/arcode/Default.asp).
Heir property is controlled by multiple heirs with various shares in the farm you leave behind. The property may not be farmed by any of the family members or rented to another farmer unless ALL heirs agree upon the terms, says Dr. Fernandez. One or more heirs may file a partition suit demanding the farm be divided or sold thus ending your family farming legacy. See A.C.A. & 28-53-115 (2012) available at http://www.lexisnexis.com/hottopics/arcode/Default.asp.
Farmers can protect their family legacy by creating a will, says Dr. Fernandez, who recommends consulting a professional estate planner and attorney to create a document fair and equitable to all heirs. Insurance policies are available that provide something to heirs who do not wish to farm while giving the farm to those interested in doing so.
Information in this article should not be considered an authoritative basis for interpreting the laws of the state of Arkansas on matters of ownership or estate planning. It is intended to help a person better understand property ownership and be prepared to use the professional services of an attorney.
Dr. Fernandez is interested in helping small farmers and ranchers manage their small farms and ranches efficiently and profitably and continue their farming legacies. For help with livestock care, production or management, contact Dr. Fernandez at (870) 575-7214 or email@example.com.