By Darren Wilcox
Originally published by Dakota Farmer at farmprogress.com
As we flip the calendar into a new year, my thoughts reflect on a topic that crosses my mind often. it is our aging farming population. I still see a few guys in their 80’s still with a tight grip on the farm they built a generation ago, their kids & grandkids patiently wait to command the ship. I also see people, my age, staring at 50 hoping to continue farming until a kid or 2 wants to take over in a few years. But there is starting to be a large populous of farmers today, in their early to mid-60’s shopping for houses in Lake Havasu & calling it a career
Hopefully, everyone has been working on a Succession plan at this point, if you haven’ t you needed to start yesterday. I know no one wants to think about their own mortality or “what if” but to protect Assets within your operation is a must. Farmland is not just real estate — it’s a working asset, a legacy, and often the centerpiece of a family’s financial security. Thoughtful planning is essential to ensure your land stays productive, passes smoothly to heirs, and avoids unnecessary legal costs or disputes
This article explains four commonly used mechanisms for farmland protection in North Dakota — Irrevocable Trusts, Revocable Trusts, Life Estates, and Transfer-on-Death (TOD) Deeds — and highlights the pros and cons of each.
Irrevocable Trust
An irrevocable trust is a legal entity into which you transfer ownership of your farmland. Once funded, the trust typically cannot be changed or revoked without beneficiary consent or court approval.
How It Works
Once the land is transferred to the trust, a trustee manages it under the terms you set at creation. You give up direct ownership, but the trust directs how the land will be used and who will benefit.
Pros
- Asset protection: Since the land is no longer owned personally, it may be protected from personal creditors, lawsuits, or other claims.
- Estate planning: Removing land from your personal estate can help manage exposure to federal estate tax (North Dakota currently has no separate state estate tax).
- Control over future use: The trust can dictate that the land remains in agricultural use or restrict subdivision or sale.
- Avoids probate: The trust structure eliminates the need for probate court involvement in the transfer of the land.
Cons
- Loss of control: You cannot easily sell, mortgage, or change the trust terms after funding it.
- Complexity and cost: Drafting and administering irrevocable trusts requires legal expertise and ongoing oversight.
- Tax considerations: Although the land may be out of your estate, there can be federal gift tax implications when you fund the trust.
Best for: Farmers focused on long-term protection, asset safeguarding, and multi-generation succession plans.
Revocable Trust (Living Trust)
A revocable trust — often called a living trust — allows you to place farmland into a trust while retaining full control during your lifetime.
How It Works
You typically serve as the initial trustee and can change or revoke the trust at any time. Upon your death, a successor trustee distributes assets to beneficiaries without probate.
Pros
- Control: You can modify the trust, sell the land, or change beneficiaries at any time.
- Probate avoidance: Land in the trust passes outside of probate, potentially saving time and expense.
- Privacy: Trust administration generally avoids the public proceedings of probate.
Cons
- No creditor protection: Because you retain control, the land remains exposed to personal creditors and legal claims.
- No estate tax exclusion: The land remains part of your federal taxable estate.
- No Medicaid shelter: Assets in a revocable trust typically count toward eligibility or recovery.
Best for: Farmers who want simplified succession and probate avoidance while maintaining control of their land.
Life Estate Deed
A life estate is a deed in which you transfer property to a remainder beneficiary (such as a child) while retaining the right to use and benefit from the land for the rest of your life.
How It Works
Under North Dakota law, a life tenant retains the right to possession, enjoyment, and income from the property but cannot harm the remainder interest.
Upon the life tenant’s death, full ownership automatically passes to the remainder beneficiary without probate.
Pros
- Lifetime use and income: You can farm, lease, or collect rent while alive.
- Avoids probate: The remainder interest vests at death without court involvement.
- Potential planning benefits: Life estates are sometimes used to assist with Medicaid planning or gift and estate tax strategies (value of remainder counted as a gift, not the full property).
Cons
- Reduced flexibility: Selling or mortgaging the land generally requires the remainder beneficiary’s consent.
- Family conflict risk: Shared interests can cause disputes.
- Credit exposure: The remainder interest may be reached by heirs’ creditors.
Best for: Landowners who want to ensure children inherit the land while retaining use during life and minimizing probate.
Transfer-on-Death (TOD) Deed
North Dakota allows Transfer-on-Death deeds for real estate. This mechanism lets a landowner name one or more beneficiaries who will receive the property at death — without probate.
How It Works
You execute and record a TOD deed while alive. It doesn’t affect ownership or control during your life — and can be revoked or changed at any time. Upon your death, the property passes directly to the beneficiary outside of probate.
Pros
- Simple and flexible: Easy to set up and revise; no trust or ongoing administration required.
- Retained control: You can sell, mortgage, or revoke the deed any time before death.
- Probate avoidance: Transfers automatically to beneficiaries without court proceedings.
Cons
- No asset protection: During your lifetime, the land remains exposed to creditors and legal claims.
- No tax shelter: The land stays in your estate for federal tax purposes.
- No land-use restrictions: Beneficiaries can sell or subdivide unless other restrictions are in place.
Best for: Farmers who want a low-cost, straightforward probate-avoidance tool with full control during life.
Choosing the Right Tool for Your Farm
Farmland protection should align with family goals, tax planning, operational realities, and state law. North Dakota’s legal environment — including the ability to use TOD deeds and the lack of a separate state estate tax — gives landowners flexible options, but each tool carries trade-offs. Consulting an attorney experienced in North Dakota agricultural estate planning is essential to tailor the right approach.
Protecting your farm isn’t just about title—it’s about securing your family’s legacy and keeping your land working for the next generation.
For more information on the North Dakota Farm Management Program, visit ndfarmmanagement.com or contact Madison Bodine at 701-955-0181. The ND Farm Management Education Program is sponsored by the North Dakota State Department of Agriculture.