Estate planning is a powerful tool. Many people put off using it because it encompasses a fundamental fear, that of our own demise. When we discuss the future in terms of estate planning, we really are not speaking about our future, but instead, someone else's. We do not want to think about our end.
However, if you do not do anything, and fail to put together an effective estate plan, the end will still come. And your estate will be divided, whether you do anything. The consequences of inaction can be rather unpleasant. During the estate administration, if you have no will or other estate planning instrument, like a trust, in place, you estate will be subject to intestate succession.
Intestate succession is controlled by Michigan statutes, and it divides your estate by a formula designed by the legislature. Because this applies to all Michigan, residents who die without a will, these laws generally comport with how most people would want their assets to be distributed.
But, your estate may not be best served by this distribution. If you own farmland, especially if it has been in your family for decades, it may have appreciated substantially from when you acquired it.
If you have not properly planned, one negative consequence is that your estate could owe federal estate tax. While there are substantial credits to the estate tax, given the value of Michigan farmland, some properties could exceed the credit amount.
Your estate could be forced to sell of parcels of land to generate enough cash to pay these expenses. With proper planning, you can ensure that your heirs receive property you desire.
Source: WKZO, "Karl Guenther Column: Estate Planning for Michigan Farmland," March 17, 2013