The Oklahoma Bar Journal February 2024

A CCORDING TO GOVERNMENT ESTIMATES, 70% of adults who survive to the age of 65 will receive some form of long-term care before death. 1 That care does not come cheap. In 2021, the annual median cost of a home health aide in Oklahoma exceeded $58,000; the cost of a semi-private room in a nursing home facility was over $65,000. 2

care planning? It is not unusual for family-owned farms to carry values in the millions of dollars – if not tens of millions of dollars – representing the bulk of the client’s net worth. Yet, owing to their high operating costs, the agribusiness client might lack the liquidity to absorb long-term care expenses in the event of incapacity. What’s more, owners of fam ily businesses tend to prioritize succession planning. These clients may have a child who works in the business and is slated to one day assume ownership and control of it. However, if the client ends up in a nursing home, the family could be faced with selling the farm to pay for it. One option is long-term care insurance. Unfortunately, long-term care insurance is outside the reach of many clients stemming from age or health conditions. Luckily, with careful planning, we can still help our farming and ranching clients avoid the worst-case scenario. Although

Given these figures, incapacity can derail even the most well thought-out estate plans. And the risk is more acute for certain types of clients. One such client is the farmer and rancher. Oklahoma ranks fourth in the nation for number of farms, and our state exports $1.8 billion in agricultural products every year. 3 While farming is big business, it continues to be a family one: upwards of 97% of farms are family owned. 4 And many of these farms have been in the family for ages, conceivably even dating to the Land Run of 1889. Estate plan ning for farmers and ranchers thus entails both great opportunities as well as considerable risk. Many practitioners rightfully focus on tax minimization, fiduciary selec tion and distribution to the next generation. Frequently overlooked, though, is the possibility that the family patriarch or matriarch will become incapacitated – a ticking time bomb with the potential to

derail a legacy built through decades of toil and perseverance.

WHY LONG-TERM CARE PLANNING IS CRITICAL FOR FARMERS AND RANCHERS Oklahoma’s beloved Will Rogers once quipped: “The farmer has to be an optimist, or he wouldn’t still be a farmer.” Agriculture is not only hard work but also is subject to a larger number of variables than almost any other industry. The weather. Commodity prices. Recessions. International conflicts ( e.g., Russia’s invasion of Ukraine). For the family farmer, it all matters. If that were not enough, agriculture is extremely cost-intensive, particularly in times of higher inflation. Total expendi tures by U.S. farms – not including Hawaii and Alaska – reached $452.7 billion in 2022, a 15.2% increase from the previous year. 5 As they would tell you, our state’s farmers and ranchers oper ate on tight margins. How is this relevant to estate and long-term

Statements or opinions expressed in the Oklahoma Bar Journal are those of the authors and do not necessarily reflect those of the Oklahoma Bar Association, its officers, Board of Governors, Board of Editors or staff.

FEBRUARY 2024 | 23

THE OKLAHOMA BAR JOURNAL