DTN writer Elizabeth Williams reported last week that, “Even when families mostly get along, managing a transition is difficult. Family farm advisers worry recent changes to the tax code — particularly the doubling of the federal estate tax exemption to $11.2 million per individual or $22.4 million per couple — could take the pressure off farm families to plan their farm’s transition to the next generation.
“‘There are a lot of nontax reasons to continue to plan and manage transitioning the farm,’ said Joseph Duda, CPA and agribusiness industry professional with CliftonLarsonAllen in Rochester, Minnesota. Like in [Nebraska farmer Tim Andersen’s] case, it’s especially important if you have more than one child.
“Duda said working with a professional adviser, who is not just selling life insurance, can go a long way to bringing clarity to the transition.”
The DTN article noted that, “On the surface, it seems simple. Mom and dad had an estate plan, put their assets in a business entity and gifted shares to their adult children. They have a buy-sell agreement, so they think the farm should pass seamlessly to the next generation. The on-farm heir should be able to keep the operation together to pass on to his children who will continue the family farm.
“It’s rarely that simple.”
Ms. Williams pointed out that, “If you want to do your heirs a favor, family farm advisers suggest having a file with all the account numbers and contact persons with phone numbers for each of your brokerage, bank, insurance and elevator accounts as well as the location of deeds, if you keep them in a safe deposit box, or a copy of your deeds. It’s important to update this yearly. You may not have annual changes, but when changes occur, they might go unrecorded in the file if you don’t update regularly.”
And, “Buying out off-farm heirs has gotten tougher as farmland values have skyrocketed over the past 20 years,” the DTN article said.
Ms. Williams added that, “Not all local attorneys are well versed in agricultural estate planning, but your banker or accountant could have good recommendations. Your land-grant college’s agriculture economist who specializes in taxes or transition planning may also be able to recommend a good adviser in your state. You may have to go outside your area to find the right estate-planning expert for your farm.”
