For your situation and based on your brief description, an LLC may be an excellent entity choice for managing the family farm.

• You may leave membership shares (ownership interests in an LLC) to your children in your trust/will.

• The LLC agreement should specify how to manage the entity, make decisions, add members, or allow for withdrawal.

• Allow your children to co-manage the property, lease the land, acquire additional property, etc., according to a written operating agreement.

An LLC alone will not help you avoid the estate tax. However, you may decrease the value of the properties and thereby reduce the estate tax through valuation discounts using an LLC.

Two discounts are commonly used in estate planning. One is for a lack of control and the other is for a lack of marketability. Assuming you establish some form of divided ownership in which no single person has a majority or controlling interest, each owner’s separate interest may be appropriately discounted.

So, an LLC may allow you to better manage the property and at the same time mitigate the estate tax by discounting the property value. But these advantages are accompanied by some disadvantages, including record-keeping and income tax planning. Your children will have to keep both financial and property management records. They’ll have to account for the entity separately and include their share of expenses/income in their personal tax return.