Seeing your child grow up and become an adult is generally both exciting and somewhat frightening. They’re ready to take on the world, and now they can vote and even legally enter into contracts for the first time in their lives. For the average 18-year-old, though, they’re usually most excited about graduating from high school and ultimately getting out of your house.

In my mind, during this transition period in their life, it's good to give them the responsibility that comes with being an adult. As a parent and an attorney, I don’t encourage anyone to continue to treat adult children like they treated them when they were in elementary or junior high. They should begin being responsible for their own decisions and being aware of their own deadlines. 

However, what if something happens? What if they get sick? What if they get into a situation where they really need your help?

Frequently I hear from people who want to gift away their assets while they’re alive in order “to save taxes” and “make sure the government doesn’t take it all.” Unfortunately though, many of these people are following coffee shop advice from outdated sources or uninformed friends.

The reality is that the majority of people are better off not making gifts during their lifetime and passing assets to their children upon their death. Why, you ask? It's because of what's known as the "Step Up Basis" vs the "Carryover Basis." I'll give you an example.

A client contacted us and asked: “What is a family foundation, and should I have one?” This isn't the first time the question has come up, so I wanted to share our answer.

A family foundation is a way to obtain a charitable income tax deduction today while distributing the money to charities in the future.  It is a not-for-profit organization that holds funds and then disburses those funds to charitable organizations.  They are recognized as 501(c)(3) organizations and the person contributing to the foundation is allowed a charitable deduction when the property is transferred into the foundation.  (There are limits on the amount that can be deducted.)   So, someone puts their money into the foundation, and then the foundation distributes it to charities.

Should you have one?  It depends.

It takes a lot of hard work and dedication to build your own business. When the time comes, you may like to keep it in the family. Having a succession plan in place will ensure that the legacy of your business will live on in accordance with your wishes. As you begin thinking about your options, you may come to the realization that your children aren’t yet ready to take over the business. This raises a number of additional questions: What will happen until my children are ready? What if they aren’t interested? What will I do if they aren’t?

There is a lot to think about when putting together a succession plan for a farm: Will it stay in the family or be sold? If it does stay in the family, will all or some of your children remain active? How long do you want to stay involved in the operations? The path to get where you want can be daunting. Luckily, there are certain steps that can be taken now to make the process easier when you are ready to transition. One step we suggest is to separate the farm land from the farming operations.