How do we protect the farm from lawsuits as a result against either my husband or myself?
There are various options for passing property to a child while avoiding the probate process. One option is to create a trust. The trust document may specify the child as a beneficiary and the circumstances under which the trustee can transfer ownership. Property distributed by the trustee doesn't need to go through probate.
Another option is to transfer the property to the child while retaining a life estate. The life estate tenant owns the property only during his/her lifetime, with the property transferring to the remaindermen on the death of the life tenant. Therefore, the child’s interest in the house is known as a remainder. The child becomes the owner of the house upon the parent’s death without the need for probate. Such a transfer may result in a lower tax basis for the remainder owner of the property. Consideration should also be given to how house expenses will be shared.
Another possibility is to create a joint tenancy with right of survivorship. When one tenant dies, the remaining tenants automatically inherit his/her portion. However, there are disadvantages. An asset held in joint tenancy with a child is then subject to any judgments that they may have placed on them.
There are differing tax implications for the various options. I suggest you contact a local attorney who can review all the facts and documents involved.