Congress has pending estate tax legislation the could likely mean the end of family farms. Even if the current law becomes effective, it could severely challenge farm families. Currently, the estate tax exemption is $11.7 million for a single person and $23.4 million for spouses combined. This means that any family farm (land and business value) that amounts to over the exemption amount would be subject to a 40% estate tax upon death. This tax is typically due in cash within 9 months of passing. You would be surprised how easy it is to reach this exemption amount…. In some cases, only $3,500 acres of farmland.
However, this is soon becoming more of an issue. Congress has plans for the estate tax exemption to be cut in half, to $6 million or $12 million combined. With the estate tax exemption falling and farmland value rising, this would affect many family farms. Heirs inheriting farms that would be subject to millions in estate taxes could be forced to sell the land just to pay the taxes. This is a major problem looming for farm families
Proper estate planning can alleviate this problem, but farmers need to act fast while the current exemption is still in place. Many things can be done, whether it be a gifting plan, life insurance, or a proper trust setup. Farmers need to reach out to an experienced estate planning attorney in the agricultural space who is aware of all of the issues farmers are facing.
The problem is fixable. At AgCounsel, we know how to do it. We have experience and are specialized in this type of planning and would love to show you.
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