Protect Your Tennessee Farm: Real Estate Strategies and Estate Planning

Why Farm-Specific Planning Matters

Farms are both businesses and heritage assets. Without a coordinated plan, families can encounter title complications, probate delays, disputes over management, or sales under pressure to satisfy debts or taxes. Farm-focused planning aligns ownership, operations, and succession so the land can stay productive and in the family.

Core Real Estate Foundations

• Title review and boundary clarity. Confirm record title, legal descriptions, access, existing easements, and encroachments. Consider a survey if boundaries are unclear. Ensure documents are properly recorded under Tennessee’s registration statutes (Tenn. Code Ann. Title 66, Ch. 24).
• Deed strategy. Tennessee recognizes common deed types (e.g., warranty and quitclaim); the right deed balances transfer goals and title warranties (Tenn. Code Ann. Title 66, Ch. 5). Tennessee does not currently authorize transfer-on-death deeds for real property; alternatives may include a revocable trust, a life estate deed, or survivorship titling where appropriate and expressly stated (ULC TOD Deed enactment status; Tenn. Code Ann. § 66-1-107).
• Conservation and agricultural easements. Voluntary conservation easements can preserve agricultural use under Tennessee’s Uniform Conservation Easement Act and may offer tax benefits if federal requirements are met (Tenn. Code Ann. Title 66, Ch. 9, Pt. 3; 26 U.S.C. § 170(h)).
• Mineral, timber, and water rights. Clarify what rights were reserved or conveyed in prior deeds and align future transfers with your operational goals.
• Farm leases. Use written cropland, pasture, or hunting leases to define term, renewal, maintenance, insurance, and risk allocation to prevent disputes and protect the land.

Using Entities to Separate Land and Operations

Many families place the land in a holding entity (often an LLC) and run the farm business through a separate entity that leases the land. Potential benefits include liability separation, clearer management roles, and buy-sell mechanisms for next-generation owners. Operating agreements should address voting, manager authority, transfer restrictions, valuation, and dispute resolution (see Tennessee Revised LLC Act).

Estate Planning for Continuity

• Will-based plans. A properly executed Tennessee will can coordinate who receives real estate, equipment, and business interests (Tenn. Code Ann. Title 32). Complement with beneficiary designations for accounts and life insurance.
• Revocable living trusts. Trusts can provide incapacity planning, streamline post-death administration, and centralize management of multi-parcel farms. They also can hold LLC interests and set distribution terms tied to farm viability (Tennessee Trust Code).
• Powers of attorney and health directives. Name trusted agents for financial and health decisions if you become incapacitated, so operations and banking can continue without interruption (Tenn. Code Ann. Title 34, Ch. 6; Tennessee Health Care Decisions Act).
• Special use and succession aims. Thoughtful strategies can keep the farm intact, balance inheritances among farming and non-farming heirs, and, for eligible estates, consider federal special-use valuation (26 U.S.C. § 2032A).

Gifting, Sales, and Buy-Sell Planning

Gradual transfers to next-generation farmers—through gifts, sales, or a combination—can be paired with management milestones. Buy-sell agreements (in an LLC or between heirs) set pricing methods, funding sources (e.g., insurance), and triggers such as retirement, death, or disability. Consider tax tools where appropriate, such as the installment method for seller financing (26 U.S.C. § 453).

Creditors, Liability, and Risk

Layered protection often includes: appropriate entity use; written leases between related entities; carefully structured personal guarantees; insurance coverage for liability, crop, livestock, and equipment; and adherence to safety and employment practices. Ensure financing documents align with your entity and succession structure (see Tennessee Revised LLC Act for limited liability and governance provisions).

Conservation and Tax Considerations

Conservation easements, installment sales, like-kind exchanges, and entity capitalization all have tax implications. Coordinate with your tax advisor to understand basis, depreciation, recapture, and potential deductions and deferrals (e.g., § 170(h) for conservation easements; § 1031 for like-kind exchanges; § 453 for installment sales). Requirements and limits apply.

Probate, Non-Probate Transfers, and Titling

Property passing by will generally goes through a court-supervised process (Tenn. Code Ann. Title 30). Assets titled in a properly funded revocable trust, or passing by beneficiary designation or survivorship titling, can transfer outside probate. In Tennessee, survivorship rights in joint ownership are not automatic and must be expressly stated (Tenn. Code Ann. § 66-1-107). Your titling choices should match your overall plan; inconsistent deeds, beneficiary forms, or operating agreements can undermine your goals.

Updating Your Plan

Revisit your plan after major life events, changes in farm operations, acquisitions or sales of land, significant debt changes, or whenever Tennessee or federal law changes affect taxes, business entities, or property transfers. Keep deeds, operating agreements, trust documents, beneficiary forms, and insurance aligned.

How Our Firm Helps

We work with Tennessee farm and ranch families to review title and entity structures; draft or update wills, trusts, and powers of attorney; form LLCs and craft operating and buy-sell agreements; coordinate deeds and easements; and design succession plans that balance fairness with farm viability. We collaborate with your tax and financial advisors to implement a plan you can maintain over time. Ready to get started? Contact our team.

This blog provides general information for Tennessee audiences and is not legal advice. Reading it does not create an attorney–client relationship. Laws change and individual circumstances vary; consult a licensed Tennessee attorney about your specific situation.