Minnesota’s Corporate Farm Law: What Every Farm Owner Needs to Know

If you own or operate farmland in Minnesota through an LLC, corporation, limited partnership, or irrevocable trust, you may not realize that you’re subject to a unique law: Minnesota’s corporate farm law. Despite the name, it’s not designed to help corporations — it’s designed to protect family farms.

This law has been on the books since the 1970s, making Minnesota one of the first states in the nation to pass legislation aimed at preserving family farm ownership. Its purpose is straightforward: encourage family ownership and keep corporate investors from dominating the agricultural landscape.

Why the Law Matters

When families use LLCs or corporations in their estate and farm succession planning, these entities can provide:

• Liability protection
• Buy-sell agreements
• Smoother asset transitions between generations

However, Minnesota requires that these entities comply with corporate farm law in order to legally hold farmland. That means filing paperwork with the Minnesota Department of Agriculture (MDA) and renewing it annually.

Who Qualifies?

Family farm LLCs and corporations typically qualify as long as:

1. Ownership: The owners are closely related (parents, children, siblings, etc.).
2. Active involvement: At least one owner either lives on the farm or is actively engaged in farming operations.

This ensures that farmland in an LLC isn’t just an investment vehicle — it remains tied to active, family-based farming.

Compliance Requirements

• Initial Filing: Families must file an application with the MDA listing the farmland and owners.
• Annual Renewal: A $15 renewal fee and update each year.
• Recordkeeping: The MDA maintains a database of compliant entities, and noncompliance can result in serious consequences.

The Risks of Noncompliance

If an LLC or corporation isn’t registered, the state can force the entity to divest the farmland. This could trigger liability issues, tax consequences, or even force a sale.

Even more critical, noncompliance can jeopardize estate tax benefits. Minnesota offers farmers an additional $2 million estate tax exemption — but only if the farm entity is compliant at the time of death. Without proper filings, heirs may lose that deduction, leaving the estate with a much larger tax bill.

Exemptions and Special Cases

• Revocable trusts: Exempt from reporting.
• Irrevocable trusts: Must comply once the trust becomes irrevocable.
• Other entities: Nonprofits, limited partnerships, and corporations are regulated. Partnerships and revocable trusts have more flexibility.

Why It’s Important to Review Now

Many families don’t even know about this law until it’s too late. Attorneys frequently discover unregistered LLCs during estate planning, leaving families scrambling to catch up on paperwork and compliance. Thankfully, if caught early, most farms qualify — it’s often just a matter of filing the right forms.

Next Steps

If you own farmland in Minnesota, whether or not you live in the state, and it’s held in an LLC, corporation, limited partnership, or irrevocable trust, you should:

1. Confirm your entity is registered with the MDA.
2. File or renew your corporate farm report if needed.

1. Work with a trusted advisor to ensure ongoing compliance and protect your estate tax benefits.

Minnesota’s corporate farm law isn’t just a technicality — it’s a safeguard for family farms. Staying in compliance ensures that your farm remains protected, your tax benefits remain intact, and your legacy is passed on to the next generation.

To learn more about farm succession and estate planning, keep an eye on our Events page located at: https://www.wagnerlegalmn.com/events/ and visit Farm Lawyer.

If you’re ready to start being proactive about your estate plan, contact us to get started.

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