By now you’ve probably seen the headline: Estate Taxes Set to Go Up Significantly in 2013, and a lot more people will be paying them. Unfortunately, America’s farmers and ranchers are first and foremost on the list because rising land prices have increased the net worth of producers across the country.
By the time you read this, it is possible (and my sincerest hope) Farm Bureau and other ag advocacy groups will have carried the day in Washington and we have some sensible policy on this issue. Regardless of what happens next politically, now is the time to get an estate plan in place.
Estate planning is more critical for agricultural operations now than ever before because the stakes are higher on the tax side, and because family arrangements involved in maintaining and operating a family farm are more complicated. Good planning can ensure your loved ones are able to keep more of your assets away from the tax man, and also help avoid infighting and wasted resources within the family after you’re gone.
I’ll write more about both topics in upcoming editions of the magazine. First, I want to discuss five really bad excuses we hear from people for not putting together an estate plan:
1. It’s too expensive!
While there is some expense in setting up an estate plan, the price of having a plan done right almost always outweighs the cost and trouble for your loved ones if you have no plan or an outdated plan.
Both estate taxes and probate procedures can take a huge bite out of your assets, and both can be significantly mitigated or even avoided with a good plan.
2. It’s troublesome and time consuming!
Setting up an estate plan does take time and thought, but your loved ones will come out ahead on time and headaches if you give some careful attention to the future now. And planning for tomorrow can have immediate benefits today, as you may get a fresh perspective and new understanding of your finances and operations.
It is not unusual for good estate planning to lead to better overall business planning and higher profits.
3. I don’t want to cause a fight in the family!
The short term discomfort for your family that may come with estate planning pales in comparison to the fights that break out in families when a loved one dies with no plan or an inadequate plan in place.
The certainty that grows from early notice of your intentions can lead to better planning for other family members, and fewer hurt feelings. When someone dies without a plan, it often results in protracted litigation. Litigation is expensive and time consuming – and your kids are still fighting.
4. I already have a will!
Estate plans should be reviewed and updated periodically to ensure they still conform to your wishes and reflect your current operations. If you own your land, you are likely significantly wealthier than you were 10 years ago, and that means your tax exposure has changed.
In addition, having a simple will does not avoid the costly and time consuming process of moving property through the probate court upon your death.
5. I don’t want to talk about dying!
Like everything else in your farm or business, avoiding or putting off a task because it is unpleasant does not make things easier. We all know that death is inevitable, but it is also our nature to ignore or avoid that reality. For your family’s sake, you should steel yourself to plan for the one certainty with which every farm, ranch and business must contend.
Good estate planning doesn’t have to be prohibitively expensive or painful. In this time of both prosperity and uncertainty, now is the time to get an estate plan in place.
Article published by Missouri Farm Bureau