Top Estate Planning Mistakes Farmers Make – Part1
We have had several requests to recap Nick Houle’s presentation on the Top Estate Planning Mistakes that Farmers Make presented at the Commodity Classic last week. There are several of them, so I am going to break them down into three or four on a daily basis over the next week or so. The first three are as follows:
- Procrastination – This is something I see all the time. Having unsigned or outdated documents. If you do not have your own will, the state has written one for you and you may not like its terms (assets going to your parents when you wanted it to go to your siblings, etc.). Farming’s complex issues can make this difficult to execute, but make sure your will is updated and you are at least doing your annual gifts. With several kids and grand-kids, it is easy to give away $2 million or more in value over a ten year period without touching your lifetime exemption amount.
- Property Transfer Rules – A lack of understanding these rules can be fatal. Most farmers assume their will is in control of transfers. However, IRAs, life insurance, etc. have beneficiary designations and these control. What happens if you get a divorce and forget to change the ex-spouse to your new spouse. The ex-spouse will inherit the life insurance proceeds if you do not fix this. Jointly held property skips probate, but is this what you want or need.
- “I love you” wills – Leave everything to my spouse upon death. With larger estates, this may cost your surviving spouse extra estate taxes upon their death. Should probably still have provision for a bypass or credit shelter trust, even with the new portability rules. You still love your spouse, but by fixing your will, you love them even more.
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.
[…] CPA Today! posts here (they go into more detail, as Paul Neiffer is an expert on this subject): Part 1, Part 2, Part […]