For instance, well-meaning, but ultimately not equine-savvy, family members might think they’re doing the right thing when they turn your easy-keeping pony out in a big grass pasture to live out her days, or send your rescued and rehabilitated pasture pets to find new homes at the same auction you pulled them from years before. Fortunately, there are ways to ensure such your horses don’t end up in this predicament.
At the 31st National Conference on Equine Law, held May 4-5 in Lexington, Kentucky, two attorneys—Shannon Bishop Arvin, JD, and Sarah Sloan Reeves, JD, both of Stoll Keenon Ogden PLLC, also in Lexington—shared tips on how to make sure your equine interests are handled to your specifications after your passing.
Arvin and Reeves stressed that there’s no one-size-fits-all approach to estate planning. As such, it’s up to you to decide who will inherit what and when. These are personal decisions you should make after carefully considering the available options, they said. They also suggested working with an estate planner, who can take your wishes and ensure they’re carried out in the most tax-effective way possible.
Bishop and Reeves offered tips on several important topics to consider when planning your estate.
The Future of Your Horses
This can be a challenging plan to formulate, the attorneys said. But regardless of the decision you end up making, the key to a successful transition is knowing (and specifying) exactly what you want and leaving a responsible person who’ll make good decisions in charge.
Some owners, including many who own competition or racehorses, might elect to have some or all of their horses sold. This can either take place with private sales or at a dispersal sale at auction, which, the attorneys said, might end up increasing the total amount of money your estate will receive.
Retired or special needs horses might be more difficult to sell or place in good homes. As such, many people leave a specified amount of money for their care and designate a beneficiary to receive the horse and those funds.
An attorney can draw up the legal documents stating your intentions for your horses.
The Future of Your Belongings
Not unlike planning for your horses’ future, it’s important to be specific with deciding and stating who will inherit your belongings. It’s also crucial to know how much potentially valuable items—such as artwork, trophies, saddles or harnesses, or farm maintenance equipment—are worth. For example, you know your custom silver-covered Western show saddle is worth more than $3,000, even gently used. Your nonhorsey executor, however, might not think it’s any different than the $500-dollar model at the local tack shop. Or, you might not know that the thrift-store sofa you bought for your arena observation room is actually a valuable antique worth five times the price you paid. If possible, have potentially valuable items appraised so your beneficiaries and executors know what they’re working with.
Your money is also considered a belonging that you’re free to distribute as you choose. The key, again, is to be specific about your wishes in your will or trust documents.
The Future of Your Land
In a time when developers are scooping up farmland left and right to create new businesses, some land owners might want to ensure their property doesn’t end up becoming a shopping center or an apartment complex. One way to do this, Arvin and Reeves said, is with a conservation easement.
A conservation easement is a legally binding agreement that limits certain types of uses or prevents development on the land remains in private hands. Essentially, you can specify what you want your land to be used for in the future.
The attorneys said conservation easements have both pros and cons. Perks include income and estate tax and other financial benefits, along with agricultural land preservation. Drawbacks can include decreased property value, difficulty selling the land, and the limited future land use potential.
They also cautioned that negotiating conservation easements can be complicated. As such, it’s advisable to work with an attorney familiar with conservation easements to determine if one might be a good option for you.
The Future of Your Business
If you own an equine business, you’re faced with an added challenge of determining who you want to leave in charge or what you want to happen to that entity upon your death. An attorney is the best person to help you determine and document the business’ future, but things to consider include:
- Who owns the business? Are you the sole owner, or do you have partners? This will make a difference in how it will be handled.
- Who will run the business once you’re gone and until your trust or will has been carried out?
- Do you want to leave any long-time or valuable employees gifts upon your passing?
- Will you have a buy/sell agreement for your beneficiaries? For example, if you leave your farm and associated business to your two children—an equestrian daughter and a nonhorsey son—can your son sell his portion of it if he doesn’t want to maintain his interest?
Again, work with an attorney to ensure your desires are documented to be carried out after you’re gone.
How Do I Accomplish This?
Once you’ve decided what you want to happen after your passing, it’s time to get it in writing. But you’ve got one more decision to make: Do you want a trust or a will? Arvin and Reeves described some of the differences between the two, including:
- A revocable trust (meaning one you can revoke and adjust during your lifetime) is more flexible than a will;
- A trust is also easier to manage when it comes to dealing with out-of-state real estate (if, for example, your main residence is up north, but you head south to a property you own during the winter);
- There’s no wait for probate with a revocable trust like there is with a will, so your wishes can be carried out sooner rather than later. Either way, though, it’s advisable to have a letter of last instructions—this is a document that, among other permissions, describes who will care for your horse and how from the date of your death until the will is probated or the trust is approved. Remember: A letter of last instructions doesn’t legally bind someone to caring for your horse, but it will provide direction and guidance.
- Revocable trusts can also allow for continuity of management of operations.
Of course, you’ll definitely want to have an attorney look at your individual scenario and help you decide which option will work best for you and your situation.
Use Caution: Undue Influence and Duress
A common complaint from beneficiaries (especially those who think they should have received more from you) regarding wills and trusts is that the writer might have been under undue influence or duress when he or she put the documents together. Basically, the writer might have been influenced by outside forces or of unsound mind when deciding how their belongings should be distributed.
You can help protect your intent by having your doctor supply a note indicating that, at the time the will or trust was written or established, you were of sound mind and knew what you were doing.
No, it’s not fun to think about your own death. However, working with an attorney to draw up end-of-life documents can help ensure your horses are either well-cared-for or sold according to your wishes and that your land and belongings are handled appropriately.