Own a family farm? Learn about estate planning Aug. 20
Rowan County is blessed with a vibrant, productive agriculture economy. Cash receipts from marketing, including crops, livestock and government payments, were more than $74 million in 2015. We have over 1,000 farms in our county.
To maintain the rural lifestyle and economy of this county, farm families need to think about estate planning now instead of later. The most common mistake is not getting it done. Folks delay taking the steps necessary to put an estate and succession plan in place.
They are unsure of what to do and believe there will be time to get the plan in place later. Particularly in farm families, there is indecision about how to carry on the family farm. Some people find themselves unable to decide who should serve in the role of executor or trustee.
Almost any estate plan is better than no estate plan at all. When a person dies without an estate plan in place, state law governs who gets assets and when. The lack of an estate plan may also result in higher expenses or taxes.
In the United States, many farmland owners are land rich, cash poor and have little or no estate plan. As farmland and related asset values increase, the bottom line on a balance sheet goes up and an estate plan problem could be on the horizon in the years ahead.
In December 2017, Congress passed the Tax Cuts and Jobs Act (TCJA) of 2017. The provisions of this law were effective Jan. 1. The TCJA increased the exemption amount from $5 million to $10 million – indexed for inflation from 2010. This increase is effective until Jan. 1, 2026, when the amount will revert to 2017 levels (an expiration or “sunset” provision) unless the law is extended or modified. In early 2018, the IRS announced that the 2018 exemption amount is $11.18 million (or $22.36 million for a married couple).
One thousand acres of land at an average value of $12,000 per acre is $12 million — a level that can trigger federal estate tax. Farmland owners in North Carolina may have a false sense of federal estate tax security because they think their farm assets do not reach values that trigger federal estate tax.
But adding up all the assets (equipment, buildings, etc.) and estimating increasing farmland and asset values may paint a different picture at the time of death. Be sure that you maintain an accurate balance sheet that reflects the fair market value of your assets — both current and projected. And everyone should remember — there are many more important reasons to have an estate plan in place other than avoiding federal estate taxes.
There is nothing wrong with being frugal. But think about the value of your assets and your goals for those assets and your heirs, both during your lifetime and after death. Making sure that your wishes are carried out is worth an investment of time, energy and dollars.
Build relationships with a comprehensive team of professionals: legal, accounting, tax, financial, insurance, real estate, farm management and others who may be vital to your goals. Discuss your goals and meet with these professionals regularly to maintain the estate and/or succession plan that is right for you and your family. Proper estate planning is not an inexpensive proposition, but it is well worth the investment.
Cooperative Extension and Rowan County Farm Bureau will have a workshop on “Farmland Estate Planning” Monday, Aug. 20, 6-9 p.m. at the Rowan County Extension Center, 2727 Old Concord Road. N.C. State University experts Dr. Guido van der Hoeven will give information on tax planning, and Andrew Branan Esq. will guide us in what legal questions and scenarios you should consider during estate planning.
Dinner will be provided, and there is no cost to this program. Registration is required, please call 704-216-8970 by Aug. 15, as space is limited.
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