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Tax/Estate Management
Financial woes leave farmers with 2 options

This past year has been extremely difficult for Wisconsin farmers. With increased debt loads and diminishing asset values, producers may be wondering if their farms will be viable businesses in the future. To be viable, a farm must be able to pay for its necessary assets over a reasonable period of time. In addition, its assets must be able to produce income greater than the cost to produce that income.

Avoid five common retirement myths

Retirement planning requires a clear-eyed analysis of future needs and income. Yet many individuals view retirement through rose-colored glasses.

Rest of the story on tax commission ruling

Mess with assessments for property tax and landowner attention perks up. Well, make that if the rate is raised, attention perks up.

A letter to farm parents

Hopefully, you bought the home farm when cattle, equipment and land prices were reasonable. You may have farmed in the ’70s, when more of the income went to the bottom line so debt could be paid off in a reasonable time. You may have farmed and bought additional land in the ’80s and ’90s, during that difficult period of flat milk prices, high interest rate and rising cost of operation.

Take the pyramid approach to planning

Many concepts have been illustrated with a pyramid: financial planning, relationships, diet and Maslow’s hierarchy of needs are a few that come to my mind. The way you and your advisers should approach estate planning also could be illustrated with a pyramid.

With trusts, simple is not always better

Some estate planning strategies allow you to integrate income tax reduction and personal goals. For this reason, your planning should consider the pros and cons of complex trusts.

Consider practical ideas for passing on your land

As you consider estate planning, you might feel the desire to keep land in the family without unnecessarily tying your heirs’ hands.

Rules that prevent tax ID theft

Your Social Security numbers and tax ID numbers are highly confidential, and need to be kept as such. Consider these tips on protecting them from Gary Markey, of the Stambaugh Ness accounting and business consulting firm, headquartered in York, Pa.

Mesh family, business values

Your family farm is sustainable because you made the necessary changes to keep it efficient, profitable and competitive. But in spite of all your work, it hasn’t gotten easier. You operate with limited cash flow, rising operating and family living expenses, and maybe high debt from making needed improvements.

Protect your children with a will

Joe stopped by the other day to talk about the need to update his and his wife’s wills. Joe’s father recently died, and it made him think about what would happen to his young children if he and his wife should die prematurely.

Estate planning: More than preparing your will

I got a call from a reader named Tom who said he had prepared his will and was glad to have his estate planning done. Unfortunately, preparing a will is only part of the process of estate planning, and only one of the tasks that need to be completed. There are several other issues that need to be addressed in the estate planning process. Some of them are discussed in this article.

Plan for transfer of farm machinery

Frequently, I receive questions regarding the sale or transfer of farm machinery between one generation and the next. The rules for taxation of depreciable assets are complicated.

Farmer opts for in-house transition

For 34 years, Don Gibbs was a berry farmer. But for the past six years, he’s been a farmland owner and observer, watching his lifetime accomplishments continue on.

Farm forevermore

Rob and Regina Richardson are in their late 50s, and while retirement is still several years away, they feel good knowing that their son, Roy, will continue farming their land.

Know partners’ expectations

Statistically, nearly 50% of marriages end in divorce. One primary reason a marriage may not succeed is that the couple failed to discuss, prior to the marriage, their expectations of their long-term commitment to one another. For example, engaged couples often do not talk about how money will be spent, how careers will change or not change, how children should be disciplined or how to deal with annoying in-laws.

Estate plans are only effective if up to date

As a farmer, your estate planning goals probably include avoiding the costs, delays and public disclosure of probate in your county court. A neighbor may have told you his estate plan is set up to avoid going to court. You may have experienced court probate after the death of a parent or other family member. You may just be wondering whether you should have a living trust.

Dear Uncle Sam: Wake up — now!

Uncle Sam, all niceties aside, it’s time you wake up and smell the manure! It’s your doing! America’s most taxing problem is your spending problem.

Watch these ’11 tax law changes

In December, President Barack Obama signed the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010. Here’s a rundown of some key provisions.

Ignore or use small-biz incentives?

September’s hike of Section 179 enhanced depreciation and return of bonus depreciation (the Small Business Jobs and Credit Act) sounds enticing. Got any sage advice of benefit — other than spend, spend, spend? Would the exclusion of gains on small-business stock benefit our partnership or corporation?

Sweeter tax incentives arrive just in time

The Small Business Jobs and Credit Act provides numerous tax incentives targeted to small business owners. Here are some key provisions that may benefit agriculture.

Making the decision to ‘trust’

There are many different kinds of trusts including, but not limited to, marital trusts, charitable trusts, revocable trusts, irrevocable trusts, family trusts, living trusts and even pet trusts.

Should he stay or leave the dairy?

Dad and I have had long, sometimes heated arguments over whether to stay in the dairy business. He doesn’t want to spend money for technology to keep up. I say you have to invest forward. He owns the farm (230 acres). We average 17,680 pounds on 143 cows with a 480,000 somatic cell count (SCC). What’s your counsel? Should I look for opportunities elsewhere?

How to use funds not needed in the farming operation

Last month I discussed how farmers with excess money could reduce their taxes by giving money to their children and grandchildren with cash or grain gifts.

When tax planning goes awry

Sometimes the best plans go awry. So it is with income tax planning.Most of the time, taxable income is optimized during an appointment held shortly before
year-end.

How they’re transferring the farm

Here’s a look at how some Dakota farmers and ranchers are transferring ownership and management control.

Top 10 rules for managing successful farm transition

David Kohl is a Virginia Tech professor emeritus and president of AgriVisions LLC, a knowledge-based consulting business providing cutting-edge programs to agricultural organizations worldwide.

Kitchen table serves as center of dining and succession planning for the farm

Planning for the future of your farm and how to entrust it to the next generation is just as important as planning your seeds and inputs. Angela Gloy, Purdue University Extension ag economist, says discussing and implementing farm succession planning goes a long way to ensure amiable family dinners.

Let Uncle Sam help transfer the farm

Farms in transition have more opportunities than ever to transfer large amounts of assets to the next generation without incurring huge income tax liabilities. Several of the current opportunities include the new $5 million gift tax exemption, low applicable federal interest rates and a continuation of the low capital gains rates.

Does your operation carry enough liability coverage?

Insurance is tricky. It has more loopholes than one can count. Each policy is different, and each farm makes it so.

When to turn down an inheritance

Perhaps you have heard the story of Wellington R. Burt, a man at one time among the eight wealthiest Americans. Under the terms of his will, the bulk of his estate was not to be distributed until 21 years after the death of his last surviving grandchild. Now, 92 years after his death, 12 of his distant heirs will share his estate, currently valued at around $110 million.

Dodge estate planning minefields

Some things seem like they should be easy — and they can be easy. However, some things simply appear easy, even when they are very difficult. For example, crossing a field of 50 yards seems simple, right? However, if that field is a minefield, it might be a very hazardous crossing indeed! On the surface, both fields might appear the same to the ordinary person. However, experts can spot the hidden problems which the ordinary person may not.

Your No. 1 job – replace yourself

If you want your farm or ranch to continue after you die or retire, your No. 1 job now is to find someone who can take over and be successful.

Families farming together

As the new guy on the farm, Justin Martz has a singular goal: be a sponge. “I want to soak up as much knowledge as my partners are willing to share,” he says.

Working their way in

Darrell Dunteman has an ironically simple recipe for bringing the next generation into the family farming operation.

Don’t let estate tax changes stop planning

The 2010 Tax Relief Act lowers estate taxes for 2011 and 2012 by increasing the exemption from $1 million to $5 million (as indexed after 2011), and reducing the top rate from 55% to 35%. The $5 million exemption is per person, with a $10 million exemption for married couples. Many more farm families have a value that comes in under the exclusion amounts.

Estate planning opportunity exists

Congress’ gridlock on estate taxes may be your opportunity to act.

Estate plan may need revision

Soaring farmland values in 2011 and the continuing increase into this year are raising a number of questions. Important questions if you own land are: How is this rapid increase affecting your estate plan? Is your present plan outdated?

Options exist for siblings split on selling farmland

I own land with my three siblings. Two of them want to sell now at these high land prices and two of us don’t. What do you think? What are our options?

Face it, not fear it

One of the top reasons we procrastinate on a project is because we feel overwhelmed. We don’t know where to start, so we don’t start at all. Or, the end goal seems unreachable, and we don’t know which path to take to get there, so we avoid it altogether. I am guilty of this myself, and I see it every day in my estate planning practice.

Start year-end financial plan

With current commodity prices at record levels and crop yields still unsure, 2012 will be a year where farms will want to do some early, year-end financial planning.

Leasing land? Know what your rights are

A farmer steps out his truck on his leased farmland only to find a group of hunters he does not know. His first instinct is to call the local authorities. But, Joe Koenen says, don’t start dialing just yet.

Estate tax bite could skyrocket next year

Ask an ag economist about the estate tax situation, and he may ask if you want the good news, worst possible news or so-so news first.

Fortifying farmland

There are 10 million acres of ag land in Michigan and nearly a third are enrolled in the state’s temporary farmland preservation program, commonly known as P.A. 116.

Preparing for the unexpected

If you were severely injured or died today, would your spouse or family know what to do with the farm? Who would milk the cows tonight, tomorrow or next week? Who would plant the crops or harvest hay? Would your family be able to make sound decisions regarding the farm’s future in a time of severe stress or grieving? Unfortunately, this situation happens far too often for many families; the main farm manager or owner suddenly is injured or passes away, and the famil

New health care law includes tax breaks

In March, the United States Congress passed the Patient Protection and Affordable Care Act, often referred to as “Obama Care.”

Uncertainty ahead

The economic forecast for agriculture is sunshine and storm clouds with a high likelihood for both, according to economist David Kohl.

Plan your farm’s legacy

Northeast Iowa farmers Tom and Irene Frantzen have so many questions to consider about their farm legacy: Should the farm pass to their children? What if they don’t have lineal descendants in the future? What will happen if one of them gets a major illness next year? Is more life insurance needed? How do they ensure that their farm continues as a conservation farm in perpetuity?

Transition tips

There’s plenty of good legal advice available on how to transfer a farm or ranch to the next generation. But you probably haven’t heard a list of transition tips that are as practical or as down-to-earth as Ray Erbele’s.

Seven keys to measuring progress in family business transfer

What is it that keeps a family from successfully navigating a generational farm transfer? If the answer were simple, more people would complete a successful transfer.

Ag policy: in the past and into the future

Exactly 150 years ago, four fundamental pieces of agricultural legislation were passed in Congress and signed by President Abraham Lincoln.

Land values up whopping 31%

Nebraska’s agricultural real estate values jumped 31% in the last year, the largest increase in the 34-year history of the University of Nebraska-Lincoln’s annual survey.

Manage crop insurance payments

Farmers who pay income taxes on a cash basis have been adept at shifting farm income and expenses into the tax year that’s most advantageous.

Neighbors unite in farm lease pact

Opportunity. That’s what young farmers Dustin and Scynthia Schnake found five years ago when they entered a lease agreement with neighbors Clif and Alice Harrington. The arrangement has proven fruitful for both parties — providing the Schnakes room for expansion and the Harringtons a chance to scale back their operation.

Families: It’s time to communicate

Whether you have a business with 25 employees or own a small ranch or farm with just family working together, one factor is essential to the success of the business.

Make way for the next generation

Now in their mid-fifties, Ralph and Richard Renegar were raised on tobacco. Today they have two grown sons of their own: Ralph’s son, Dustin, and Richard’s son, Justin. And like their fathers before them, Dustin and Justin were raised growing tobacco on Hoot ’N Hollar Farms, the family’s Harmony, N.C., operation. But with the exception of Hank Williams Jr., perhaps, tradition can only take you so far.