When a farm or family business is part of a Pennsylvania estate, the administration involves challenges that a typical probate does not — the operation needs to keep running, valuations are complex, multiple family members may have conflicting interests, and tax decisions made during administration can determine whether the family keeps the land or loses it.
Why Farm and Business Estates Are Different
A bank account can be divided evenly among three children. A farm cannot. Neither can a family business, a commercial building, or a professional practice. These assets are illiquid, operationally active, and deeply personal. The executor's job is not simply to distribute value — it is to preserve a going concern while meeting every legal obligation of estate administration.
The decisions that matter most in these estates are often made in the first weeks: Who keeps the operation running? What happens to employees, tenants, or livestock? How do you value an asset that does not trade on a public market? And how do you treat the child who has been working the farm for twenty years the same as the child who moved away?
Farm Estates
Keeping the Farm Running During Administration
An estate that includes an active farm cannot wait twelve months for the executor to get organized. Crops need to be harvested or planted. Livestock need daily care. Equipment needs maintenance. Leases with tenant farmers need to be honored or renegotiated. Cash flow decisions need to be made immediately, and the executor needs legal authority and practical guidance to make them.
We help executors understand their authority to continue farm operations during administration, manage existing contracts and leases, make time-sensitive decisions about planting, harvesting, and sales, and pay operating expenses from estate funds without creating liability issues.
Valuation
Farm real estate in Pennsylvania is valued at fair market value for inheritance tax purposes — which may be significantly different from the property's value as farmland. A 100-acre farm in Westmoreland County may be worth $500,000 as agricultural land but $2 million if a developer were to subdivide it. The choice of appraiser and the methodology used can have a meaningful impact on the inheritance tax owed.
Pennsylvania does offer a preferential assessment program (Act 319, commonly known as Clean and Green) that provides reduced property tax assessments for agricultural land. However, if the land use changes after death — for example, if an heir sells the property for development — rollback taxes may be triggered.
Keeping the Farm in the Family
When one child wants to continue farming and the other children do not, the estate plan needs to provide a way for the farming child to acquire the property without forcing a sale, while still treating the other children fairly. This often involves life insurance funding, installment buyouts, or a family LLC structure. When the estate plan did not anticipate this, we help the family negotiate a practical solution during administration.
Family Business Estates
Business Continuity
When the owner of a closely held business dies, the business does not stop. Employees still need to be paid. Customers and vendors need to be told who is in charge. Banking relationships need to be maintained. If the business is an LLC or corporation, the operating agreement or corporate governance documents may dictate what happens — but if those documents are poorly drafted or nonexistent, the executor is left making decisions with limited guidance and real liability.
We advise executors on how to maintain business operations during administration, exercise authority under the entity's governing documents, communicate with employees, customers, and vendors, and preserve the business's value while the estate determines its future.
Valuation and Buy-Sell Agreements
Business valuation is one of the most consequential decisions in a family business estate. The value determines the inheritance tax owed, the amount each beneficiary receives, and whether a buyout is financially feasible. We work with qualified business appraisers and coordinate with the estate's CPA to arrive at a defensible valuation.
If the decedent had a buy-sell agreement with co-owners, that agreement may fix the value and the terms of the buyout. We review existing buy-sell agreements to determine whether they are still enforceable, properly funded (typically with life insurance), and consistent with the estate plan.
Transition Planning
Not every family business is intended to pass to the next generation. Sometimes the right outcome is a sale — to a co-owner, to key employees, or to an outside buyer. We help executors evaluate the options, coordinate with business brokers or M&A advisors when appropriate, and structure the transaction to minimize tax consequences for the estate and the beneficiaries.
Pennsylvania Inheritance Tax Considerations
Farm and business assets are subject to the same Pennsylvania inheritance tax rates as any other asset: 4.5% for transfers to children, 12% to siblings, 15% to others. On a farm worth $1.5 million passing to two children, the inheritance tax alone is $67,500.
For business interests, the valuation used on the inheritance tax return must be supportable. Discounts for lack of marketability and lack of control may be available for minority interests in closely held businesses, which can meaningfully reduce the tax owed. We work with appraisers who understand these discounts and can support them if the Department of Revenue challenges the valuation.
If you are administering an estate that includes a farm, agricultural land, or a family business, call (724) 733-3500 or schedule a consultation. We understand the urgency — these matters do not wait.