And with the Estate Tax (the 'death tax'), if you don't have significant savings (most farmers do not), when you die, your kids will have to pay the tax on their inheritance.
And since it's really hard to sell just part of an estate (and especially a farm), that usually means selling the whole thing, just to pay the taxes on the thing you left behind for them.
The estate tax should be repealed, not just at the federal level, but in the twelve states that also have an estate tax of their own, or we'll lose the family farm, and the family farmers, forever.. killed by taxes.
Doesn't the estate tax only apply to farms worth more than $27 million?
Less than one percent of farm estates owed any estate tax in 2020. It's probably about the same in more recent years.
https://www.ers.usda.gov/amber-waves/2021/april/less-than-1-...
Where do you live that it's hard to sell a few acre parcel? That is not my experience at all in multiple states I have knowledge of.
Also, most people have little sympathy for someone who just inherited assets worth more than $13M (and likely double that if married) before you owe a penny in taxes. If it's a legitimate business, get a loan to pay them and continue getting even wealthier. If not, sell it all and never work a day in your life again. In fact, option two sounds pretty good to me either way :)