Real estate holdings are often the most valuable assets people have. Especially when you make your living off of the land as a farmer or rancher, your North Dakota property represents not just ongoing financial investments but also your future financial stability.
No matter how hard you work to maintain your property, you could be at risk of losing it all if you get divorced or if someone files a civil lawsuit against you. Both creditors and those with a personal injury claim could impact your farm.
How can you protect you’re valuable farmland from creditor claims or a future divorce that affects your marriage or the marriage of your children who will inherit the property?
Farmland trusts are common tools for those who must protect their property
When you directly own a piece of land or a home, other people can make legal claims against your ownership. For example, creditors that you have failed to repay could file a civil lawsuit against you and ask the courts to place a lien against your property or even compel you to sell assets for their repayment.
Similarly, when you divorce your spouse, they can make a claim against your marital estate which might include a claim against the farmland. By holding ownership of the property in a trust, you can potentially eliminate those risks. Typically, neither a spouse filing for divorce nor a creditor trying to make a claim in court will be able to access property held in a trust, provided that the property was not transferred into the trust immediately prior to a civil lawsuit or divorce.
The sooner you create a trust to protect your farmland, the more likely it is that the courts will protect your ownership interest in a divorce or creditor lawsuit.
How do you create a farmland trust and transfer your property?
The exact way that you structure a trust about your current financial and legal circumstances. However, in most cases, property owners can transfer assets into a trust by creating a trust and then executing a deed.
Thinking about ways that your farmland might be vulnerable can help you take the right steps now to protect your valuable real estate from potential future threats.
