I've inherited land - now what?

If you inherit farm ground there are a lot of decisions to make. Will you keep it and farm it yourself, keep it and let the current tenants continue to farm, keep it and have somebody else farm it, or do you sell it? Another question that must be answered is how do you own the land? Is it yours outright, joint ownership with brothers and sisters, or through a partnership?

Allan Vyhnalek is a succession and transition extension educator at the University of Nebraska. He says the decision will also have tax consequences, so consult with a tax attorney and accountant to understand the most up-to-date legal and tax implications of your inheritance.

"Generally, when parents pass away it goes to the next generation and they'll get the increase in basis, which means you wouldn't have a capital gains issue if you sell it now," says Vyhnalek. "If you choose to keep it and let's say the value goes up, because land tends to increase in value over a period of time, your basis becomes whatever it is at the time of your parents' passing and then 10,15, 20 years later it's worth more, and then you'll have to pay the capital gains on the difference if you decide to sell it."

He says when siblings or other family members are included in the land inheritance, don't assume everyone will be happy and feel like they were treated fairly. Have a conversation with them on how the decisions made could affect your relationship going forward.

"Those things, in my view, should be discussed before we start discussing what's going to happen to that farm ground. Then, we start having a conversation with those family members saying, ok, what's your objective? Find out everybody's goal, find out everybody's objective, find out what everybody thinks ought to happen," he says. "Then you can just kind of work out that whole negotiation from there as far as whether you're going to keep it or whether you're going to sell."