For families who have held their land for generations, one question looms heavy: how do we keep the family farm or ranch alive and intact for the ones who come after us? This second article of a two-part series explores a range of contemporary estate planning tools that can help preserve both land and legacy.
Family Limited Partnerships
A Family Limited Partnership (FLP) is a practical structure for keeping agricultural property unified. It includes two types of owners: General Partners (GP), who control management and decisions, and Limited Partners (LP), who hold economic interests but have little or no control. The land is typically owned by the FLP, with parents serving as GPs while children gradually receive LP interests. This achieves two goals: heirs receive partnership interests—not deeded acreage—so no one can demand “their” portion, and it creates an orderly framework for transferring value.
Because LP interests carry no control and limited marketability, the IRS permits valuation discounts. Gifting these discounted interests during life removes value from the taxable estate at a lower tax cost, gradually reducing estate‑tax exposure.
Since GPs bear liability for injuries that occur on or disputes that arise over the property, many families use an LLC as the GP. Parents may control the LLC, but the structure shields them personally. Together, these tools shift the mindset from dividing land to preserving land and dividing income.
Trusts
Trusts can be used strategically to keep family land unified as it transitions to future generations by separating ownership from control in a thoughtful way. Rather than divide acreage into smaller parcels amongst heirs, a trust holds title to the property while beneficiaries receive defined financial interest or use rights. This structure preserves operational efficiency, prevents fragmentation, and reduces the likelihood of forced sales to settle disputes or debts.
A well drafted trust can outline management authority and compensation, succession plans, buy-sell provisions, and long-term stewardship goals that reflect the family’s values. It can also protect the land from creditors or divorce settlements. By providing continuity, clarity, and protection, trusts can help legacy land remain productive and intact for generations to come.
Insurance and ILITs
Many agricultural families are “land rich and cash poor,” making it difficult to pay estate taxes or equalize inheritances without selling acreage. Life insurance can provide essential liquidity. When structured through an Irrevocable Life Insurance Trust (ILIT), the policy is owned outside the taxable estate. The property owner makes annual gifts to the ILIT to pay premiums, and upon death, the trust receives the proceeds. Those funds can then supply heirs with the cash needed for estate taxes or buyouts, thereby avoiding forced land sales.
Every family-owned agricultural operation has its own mix of personalities, financial realities, and long‑term goals. This information should serve only as a starting point for farm and ranch landowners to begin thoughtful conversations with a CERTIFIED FINANCIAL PLANNER® professional and an experienced estate‑planning attorney—ideally working together. With guidance tailored to your family’s unique dynamics, a ranching family can build a structure that protects both the land and the generation-spanning relationships that make it worth preserving.
Hannah Gohmert, CFP® is the Chief Compliance Officer of Keller Wealth Advisors.