Thoughts on Estate Planning for Farmers
I think over the next several months major changes will be made to the estate tax laws. Right now, each individual can have a tax-free estate of $3.5 million. Next year it is unlimited, however in 2011, it reverts back to $1.0 million.
I think Congress will make changes this year to make the current $3.5 million estate permanent and indexed to inflation. I also think they will allow married couples to combine the estates if it was not used up at the first death. Farmers will most likely be allowed to reduce their farm valuations by a larger amount than is currently allowed. All of these amounts may also be indexed with inflation.
This means that most farmers should be able to pass on their farms to heirs on a estate-tax free basis. If the total value of the farm and other assets is less than $7.0 million, then it should be estate-tax free. I know there are many farms with a value greater than $7.0 million, but compared to the old $2.0 million combined limit, these new amounts will make many more farms free from tax.
Paul Neiffer is a certified public accountant and business advisor specializing in income taxation, accounting services, and succession planning for farmers and agribusiness processors. Paul is a principal with CliftonLarsonAllen in Walla Walla, Washington, as well as a regular speaker at national conferences and contributor at agweb.com. Raised on a farm in central Washington, he has been immersed in the ag industry his entire life, including the last 30 years professionally. Paul and his wife purchase an 180 acre ranch in 2016 and enjoy keeping it full of animals.
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