“Start the process today,” he said. “Whether you’re on the farm or not, everyone needs an estate plan. Tomorrow is not guaranteed. It doesn’t matter what your wishes are … if nothing is documented, your wishes do not matter.”

Christensen, farm management specialist for Iowa State University Extension and Outreach in southwest Iowa, said those seeking to begin this process need to be aware of the primary terms involved.

“Estate planning” means the transfer of assets (equipment, livestock, land, etc.), and is the easiest part of the process.

“Transition planning” involves transitioning the business from one generation to the next, including business management, decision-making and how those decisions will get made.

“Succession planning” is the piece that puts the previous two pieces together.

He said two-thirds of Iowa farmland is owned by people 65 years or older, and that many farms lack a written succession plan, which serves to protect their legacy and ensure a smooth transition.

Who should help?

Christensen said a number of important people should have a place at the planning table. Attendees should include parents, asset owners, business partners, heirs working in the business, heirs not working in the business, non-family business partners, daughters-in-law and sons-in-law. Others include attorneys knowledgeable in estate planning, financial advisors, insurance advisors, management consultants, lenders and perhaps a mediator.

Christensen said while the process is layered and sometimes complicated, there are four main steps to it. Families first test the waters to see how the transition process would/could work, then they make a commitment to stand behind decisions that have been made, followed by establishing the finer details of how it will all be carried out, and ending with the older generation stepping away from the process.

He said timing is important when bringing the younger generation on board in the transition process. Christensen said it’s good to get them involved while the business is growing so they can also be part of that growth process and develop the confidence and skills necessary to carry the farm into the future.

Christensen also said thought needs to be put into how land is divided among heirs, taking into consideration what happens in successive generations as land is passed down and ownership levels decrease dramatically, depending on the number of future heirs there may be. In these cases, land may or may not remain in the family, based on specific heir circumstances.

Christensen said there are three main branches of estate planning, including retirement (ensuring the older generation will be able to live comfortably for their remaining years); estate planning (transferring the assets to the next generation), and tax planning — mostly, capital gains taxes due to equipment that may have depreciated out.

“The key for the next generation here is not to let parents give you something you don’t want (because of those capital gains risks),” Christensen said.

“The older generation needs to be careful not to make capital gains taxes the next generation’s problem,” he said. “But the first thing you need to do is sit down and figure out what you actually have. Are there assets there to give away? Are they paid for? Are there mortgages? Is this a successful business? Is there a chance for this business to be brought into the future? What do those balance sheets look like? What is the inventory? What’s the current status of the farm we’re looking to give away? What are our goals moving forward?”

Communication

Christensen said families need to be able to talk to each other in the estate planning process, covering four succession basics including:

• Does the next generation want to farm?

• Can everyone get along?

• Is there enough income to cover multiple families?

• Is there a shared vision and specific goals?

He also said knowledge needs to be transferred as a basic plan, along with communicating wishes to spouses and heirs.

“What does that next generation need to know if you’re not here tomorrow?” he said.

Christensen said flexibility needs to be built into plans for life events, such as which spouse will die first, and with that, who receives the income, and what will happen to land and assets, and the management of all of that.

“And what if something happens to both (parents)?” Christensen said. “And further, what happens if the whole family passes? Does my plan go beyond that? It’s not fun to think about, but we really need to run all those scenarios.”

Christensen said goals must be priority at the outset because that steers where the plan goes in terms of trusts, LLCs, S-corps, C-corps, wills, probate, etc. He said goals might be minimizing taxes at death, minimizing probate costs and delays, conserving property during life and after death in accordance with estate planning goals, providing financial security for parents in retirement or a family member with a disability.

“There are all kinds of tools to use, but until your goals are identified, it’s hard to decide which of those tools you should use,” he said.

Christensen addressed the “equal or fair” question, and said equal does not always mean fair when it comes to the transfer of land and assets. In essence, he said a transfer should set all recipients up for the same amount of success, and that might look different for each heir.

Christensen said three key succession planning tasks include planning for the gradual shift in management from one generation to the next, shifting ownership of the assets involved from generation to generation, and anticipating events that could disrupt management and ownership succession.

He said it’s important for the older generation to feel comfortable in the leadership of the next generation so they can step back from that leadership role. He recommended turning over control of various sectors of the business a little at a time so the next generation has time to master it before moving on to the next, for ultimate success.

Christensen said power issues can arise as the transition process moves ahead, but he said it needs to be clear who controls the decision making. Also, that the quality of decisions should be prioritized over who is making the decisions, and that alternate scenarios should be considered when it comes to making important decisions.

“I always encourage that older generation to think back to when they started, and if they made any mistakes and how they learned what they know now,” said Christensen. “Stepping aside and letting the successor run the company is one of the hardest things we do in farming.”

Tax scenarios

He said almost no one pays estate taxes today. The Big Beautiful Bill of 2025 kept the 2025 lifetime exemption at $13,990,000 per person, and changed the 2026 exemption to $15 million per person.

Starting in 2027, he said the exemption amount will be $15 million per person, indexed for inflation, and the bill made the exemption amount permanent, so there will be no sunset or reset. Additionally, the bill means there will be no change in the tax rate, so estates above the exemption will be taxed at 40 percent.

“If you’re married, as of Dec. 1 you have $30 million in exemptions — if your estate is less than $30 million, you have zero estate tax issues,” he said, adding that with today’s land values, some totals of land and assets might be closer to that mark than owners want to think about.

“If you think you’re getting close to that $15 million as an individual or $30 million as a couple, you should probably talk to your accountant and figure out a plan,” said Christensen.

Federal gift taxes are a way of shedding assets without having to pay taxes on them. They could amount to as high as $19,000 per recipient, and include unlimited gifts to spouses, charitable deductions, below-market-rate sales and rents, etc.

“(For example), Grandma and Grandpa with two kids could give away $190,000 a year by giving to their kids and grandkids — and not even need to file anything with the IRS,” said Christensen. “It’s a good way to slowly transfer some assets over time without any tax implications.”

Still, Christensen said avoiding taxes should not be a main goal when estate planning. But he stressed the importance of getting started building a succession plan today.

“It’s always a disaster (following a death) when there is not a plan in place and emotions are running high,” Christensen said. “Make those decisions when you’re in good health. It’s a great gift to give to a surviving spouse and to your next generation. We are never promised tomorrow.”

ISU Extension offers a portal for home to use as a planning tool, which can be accessed at www.calt.iastate.edu/welcome-estate-succession-planning-farmprtl. There is a $75 lifetime fee to gain access to that portal.

Christensen said his advice is only advice and should not be considered legal or official financial information.