A family member with special needs - Column - Family Business - Cover Story

Nation's Business, Feb, 1993 by Joanne C Preston, Peg Eddy

Lazy Creek Farm is a profitable Subchapter S corporation owned by John Whitworth, 79, and his wife, Mary, 75. They have two sons--Lyle, 43, and Jake, 37--and they are especially concerned about Jake.

At the age of 6, Jake was injured in a farm accident while helping his father harvest oats. The accident left him a quadriplegic, and he is limited as to what he can do and how much he can contribute to the family farm.

Lazy Creek Farms owns 200 acres on which the family raises corn, soybeans, and oats. The Whitworths also raise about 1,000 hogs per year; Lyle is in charge of the hog business. In addition, the corporation leases and farms a 360-acre tract left in trust to John and Mary by John's parents. John and Mary receive 80 percent of the net income from the trust, and each of their children receives 10 percent. The income from the trust will continue to benefit Lyle and Jake after their parents die. On his own, Lyle also rents and farms 450 acres next to Lazy Creek Farms.

John and Mary have said they intend to divide their assets equally between Lyle and Jake. However, Lyle is worried about Jake's ongoing expenses and his inability to contribute to the farming income. With a wife and children of his own, he wonders if he also will be able to look after Jake.

While they sympathize with Lyle's concerns about being his brother's keeper, John and Mary want to be assured that Jake is taken care of. They want to transfer the stock of Lazy Creek Farms to the two boys with the goal of preserving both the farm and family harmony. Considering Jake's permanent condition, how can they best structure the transfer of their assets?