For some people, estate planning can be a relatively simple and straightforward matter. When there are very basic circumstances, a last will or living trust can provide a suitable solution. If you work with a licensed estate planning attorney to construct your documents properly, you can put a basic plan in place and go forward with peace of mind.
At the same time, there are families who have more complex estate planning challenges. For example, people who own family businesses, like farmers and ranchers, have a unique set of concerns.
First of all, there is the matter of succession. You have to devise a plan if you want to pass the business along to the next generation. Plus, if you have family members who will not be involved in the operation of the farm or ranch, you have to provide for these loved ones as well, and this will involve the implementation of inheritance balancing techniques.
There is also the matter of the federal estate tax. If you’re a farmer or a rancher, you may make a good living. However, you may not consider yourself to be genuinely wealthy when it comes to your annual income.
Even if you do not feel as though you are among the upper crust as a farmer or rancher, you could face an estate planning challenge that confronts wealthy people. There is a federal estate tax in the United States, and it carries a very significant 40 percent maximum rate.
The tax is not applicable on asset transfers between spouses who are American citizens, but it can come into play when property is being passed along to anyone else. There is a $5.45 million credit or exclusion in 2016. The first $5.45 million that is passed along could be transferred tax-free, but the remainder would potentially be subject to the estate tax.
When you are inventorying your assets to determine the value of your estate for tax purposes, you have to include the value of your real property. If you are a farmer or a rancher, you may be in possession of a great deal of valuable land, and this can result in estate tax exposure.
People have sometimes been forced to sell their land to pay estate taxes, but with the proper planning, you may be able to make sure that your property stays in the family after you are gone.
Free Special Report
We have prepared an in-depth special report on estate planning for farmers, ranchers, and other family business owners. This report will provide you with a great deal of valuable information, and it is being offered free of charge right now.
Simply click this link to obtain access to your copy: Estate Planning for Farmers and Ranchers.
- Questions to Consider When Creating Your Will - November 26, 2020
- What Is a HIPAA Release? - November 24, 2020
- Academy’s Fall Summit Virtually Perfect - November 19, 2020
