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Estate Planning

Jan
11
2012

Family Business Meetings–Helping Farms Communicate

by David Marrison

Tommorrow, I will be teaching at the Kentucky Cattlemen’s Convention about communication issues for farms in transition.  Poor family communications are at the center of many farm transition and estate transfer problems.  One way which farm families can improve communication is to hold family business meetings.  Chris Zoller of Ohio State University wrote a nice factsheet on tips for successful business meetings and it can be found at:

http://ohioline.osu.edu/bst-fact/pdf/3612.pdf

What other strategies have you found to improve family communication?


This post is a reprint of a post by marrison.2 that originally appeared at OSU Extension Farm Succession Blog.
Jul
08
2011

“Transferring Your Farm Business Workshop to be held in Northeast Ohio”

By: David L. Marrison, Ag & NR Extension Educator Click here for the registration flyer As the age of farm operators increases, transferring the ownership and management of the family farm will become one of the most important issues farm families will face. This workshop has been designed to help farm families in Northeast Ohio plan for the transfer of their family farm. To help farm families plan for the future, OSU Extension will be hosting a Transferring Your Farm Business workshop on August 23, 2011 from 9:00 a.m. to 4:30 p.m. at the OSU Extension Office in Trumbull County located at 520 West Main Street in Cortland. This workshop will challenge you to actively plan for the future. Farm families are encouraged to bring members from each generation to this workshop. Kick off your estate planning discussion with the tools offered at this workshop. Learn from the estate transfer nightmares encountered by other farm families. This workshop is one which will help you develop a plan for the future, discover ways to increase family communication, and learn strategies for transferring management skills and the farm’s assets from one generation to the next. Some of the topics which will be addressed include: Getting the Family to Talk About Estate Planning, Getting Your Affairs in Order, How to Use Farm Business Arrangements in Estate Planning, Estate and Transfer Strategies, Providing Income for Multiple Generations, How Do I Treat Each Offspring Fairly Whe...
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Jul
06
2011

Ohio estate tax will disappear in 2013

The Ohio legislature has approved a repeal of the Ohio estate tax, but the tax will remain in effect for another 18 months.  The new law removes the Ohio estate tax obligation for any person who dies on or after January 1, 2013.  Governor Kasich signed the provision into law on June 30, 2011 as part of the state’s budget package.  The final version of the repeal differed from the language proposed earlier this year in H.B. 3, which proposed ending the estate tax as of January 1, 2011 (see our earlier post).


This post is a reprint of a post by Peggy Hall that originally appeared at Ohio Agricultural Law Blog.
Feb
02
2011

New Rules for Estate Taxes

by Jim Skeeles & Chris Bruynis, OSU Extension Educators

Congress passed new legislation in December affecting estate taxes, but only for 2011 and 2012, reducing federal taxation of large estates. This legislation affects families with an individual who dies in 2011 or 2012 and has assets more than one million ($1M) or an individual that gifts more than $1M dollars during this period.

With this law change, an individual can pass on a total of $5M worth of assets with no federal estate or gift tax due. Further, if the net worth of an individual’s estate combined with the total counted amount given exceeds $5M, the federal estate and/or gift tax rate has been reduced to 35%.

Also upon the death of the first spouse, the surviving spouse now receives the unused $5M exclusion of the deceased spouse. Since the surviving spouse also has her exclusion of $5M she now can transfer assets totaling $10M, either by giving them away, the assets going through her estate, or a combination of the two.

Since the federal estate tax and gift taxes are “unified”, the $5M exemption is for the combination of the value of the estate and total value of “counted” gifts over a lifetime. For instance, if the value of one’s estate is $5M and counted gifts of $1M were made over that person’s lifetime, for a total of $6M, then the amount over the exclusion, the $1M, would be taxed at 35%.

However, if the estate value is $1M with counted gifts being ano...
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This post is a reprint of a post by marrison.2 that originally appeared at OSU Extension Farm Succession Blog.
Jan
25
2011

Ohio House introduces bill to repeal Ohio estate tax

This was posted on Peggy Hall’s AG Law Blog yesterday.  Good update

Ohio House introduces bill to repeal Ohio estate tax

Posted: 24 Jan 2011 02:13 PM PST

A bill introduced in the Ohio House of Representatives proposes a complete repeal of the Ohio estate tax.  Representatives Grossman and Hottinger introduced H.B. 3 on January 11, 2011. The bill is simple:  it amends the estate tax provisions currently in Ohio law to state that the tax provisions apply only to estates of persons who died before January 1, 2011. Regardless of when the bill would become effective, persons dying after January 1, 2011 would not be subject to the estate tax. The bill also removes the estate tax return filing requirement for estates of persons dying after the January 1, 2011 date.

The Ohio estate tax is a graduated tax on a person’s gross taxable estate, less deductions and exemptions.  An estate valued at less than $338,333 pays no tax due to credits and exemptions included in the law.  Estates between the value of $338,334 and $500,000 pay a 6% estate tax while estates over $500,000 in value owe a 7% estate tax.  The state receives 20% of the estate tax revenue and the local government of the decedent’s residence receives the remaining 80% of the tax.  Ohio is one of 17 states that have an estate tax.

How is agriculture affected by the Ohio estate tax?  It’s not uncommon for a farm estate to be valued at the taxable thresho...
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This post is a reprint of a post by marrison.2 that originally appeared at OSU Extension Farm Succession Blog.
Jan
21
2011

Ohio State University Extension Can Help You Prepare for 2011

by Chris Zoller, Extension Educator, ANR Tuscarawas County
I can remember back several years ago on the first day of a junior high school math class. The teacher gave each student a piece of wood about the size and shape of a quarter. On each side of this wooden piece were the words to and it. He explained that he didn’t like hearing his students and others use the phrase, “I’ll do (you fill in the blank) when I get around to it.” So to solve this problem he gave each of us a “round to-it.” We’ve all used this phrase in our family and business settings because it’s easy to say and do. The start of a new year is often a good time to do those things you’ve been putting off and Ohio State University Extension has a number of resources to help get you moving. Tax Guides It’s that time of year to figure your income, expenses, and tax liabilities for the year. IRS Publication 225 Farmers Tax Guide is an excellent reference. It provides helpful information about filing taxes and updates about changes in tax laws that may impact you. Copies of this publication are available by contacting your local OSU Extension office. Farm Records Whether you use a paper or the Quicken software program to maintain your financial records, OSU Extension has resources to assist you. Several farmers have been in the office recently picking up new forms for the Ohio Commercial Account Book. Some have moved to a computerized software system. If you are thinking of trying Quicken, OSU Extension has developed a comprehensive manual to g...
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Oct
08
2010

2010 Step Up in Basis

by Russell N. Cunningham, OSBA Certified Specialist in Estate Planning, Trust and Probate Law Barrett, Easterday, Cunningham & Eselgroth LLP
With the 2010 repeal of the federal estate tax, the rules for determining income tax basis on inherited property became more complicated for deaths occurring in 2010.  The income tax basis of a property is used for determining capital gains when an asset is sold and depreciation.  In prior years and in future years, the estate's basis in the property is the fair market value at date of death, regardless of whether this is an increase or decrease in the decedent's basis. The basis of inherited assets in 2010 will be determined by a complicated process beginning at the lesser of the decedent's basis in the property or the fair market value of the property on date of death.  Thus for some, the basis still may be decreased, particularly for stocks that have decreased in value.  For assets whose basis is still less than the fair market value, each estate of a U.S. citizen or resident has $1,300,000 of basis to add to the decedent's existing basis. If property passes to a surviving spouse either outright or in a qualified terminable interest, the estate has another $3,000,000 of basis that the executor may allocate.  The additional basis amount is increased by capital loss and net operating loss carryovers of the decedent and certain calculated losses.  For non-resident aliens, the executor only has $60,000 of basis to allocate.   The executor may not increase the basis of any asset to more than the fair market value of the property at date of death. For example, if a...
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Jul
06
2010

International Farm Transition Network Conference Coming to Ohio

The International Farm Transition Network will host their annual conference July 20-23, 2010 at the Sheraton Suites in Cuyahoga Falls, OH. This three day meeting will bring together agricultural professionals, farmers, citizens, and service providers to discuss and learn about exciting projects in farm transition. During the conference, participants will hear panel discussions on farm labor, beginning farmer and farm succession research, and farm policy, and listen to interns, apprentices, and retiring farmers discuss their needs related to farm transition. Registration is still open! For registration, agenda, and more information, please visit: http://www.cvcountryside.org/farmland/IFTNConference.php
This post is a reprint of a post by marrison.2 that originally appeared at OSU Extension Farm Succession Blog.
Feb
16
2010

AgTransitions Web Site Helps Farms in Transition

I received an email from the University of Minnesota’s  Center for Farm Financial Management which has developed a web site called AgTransitions.  This web site provides a means for farm and ranch families to develop a written transition plan on the web. I encourage you to check it out! 

AgTransitions is located at https://www.agtransitions.umn.edu

AgTransitions provides users with a built in “curriculum” in the form of an outline for sections that might be included in a plan, tips for each section, web resources, and worksheets. Most importantly, it allows family members to communicate with each other and outside reviewers as they develop their plan. AgTransitions is not intended to replace farm succession planning workshops. Rather, it provides a means for producers to put what they have learned into action while allowing professionals to follow-up on their progress.  A great introductory video is included on the home page.


This post is a reprint of a post by marrison.2 that originally appeared at OSU Extension Farm Succession Blog.
Feb
08
2010

Planning for the Succession of your Family Business

As the age of farm operators increases, transferring the ownership and management of the family business to the next generation will become one of the most important issues farm families will face. While many farmers dream of seeing their legacy passed onto the next generation, many postpone initiating a plan for the transition of their business for a variety of reasons. Many claim  there is not enough “time” to discuss these matters. Or if planning does occur, it simply involves the senior generation drafting a will describing how the farm assets should be divided among heirs.

To help farm families plan for the future, OSU Extension will be hosting a Transferring Your Family Business to the Next Generation workshops across Ohio in March.  These workshops will help answer the questions that often arise when planning for the future: Who will manage the business in the future? How much money will I need to make it through retirement? How do I treat each offspring fairly when it comes to dividing up our farm? How will I know if my kids are ready to take over the farm? What are the legal hoops that need to be jumped through to pass the farm on without hurting the financial standing of the farm? How can we plan so the farm will be profitable for multiple generations? Is there enough equity in the farm that I can retire without selling out?  These workshops will help you develop a plan for the future, discover ways to increase family communication, make pla...
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This post is a reprint of a post by marrison.2 that originally appeared at OSU Extension Farm Succession Blog.
Jan
09
2010

Ohio changes transfer on death deed to an affidavit process

This blog was just posted early this morning by Peggy Kirk Hall (attorney and director of the OSU Agricultural & Resource Law Program) on her OSU AG Law blog located at: http://ohioaglaw.wordpress.com/

Here is her blog:

Since 2000, Ohio law has allowed property owners to avoid the probate process with a transfer on death deed, a deed that automatically transfers real property to a designated beneficiary upon the death of the property owner.   Under a new Ohio law, such transfers now require the preparation of an affidavit rather than a transfer on death deed.  The new law also allows those who hold “survivorship rights” in property to transfer their rights upon death, which the previous law prohibited. 

The changes occurred in S.B. 124, which became effective upon the governor’s signature on December 28, 2009.  The Ohio State Bar Association’s Real Property Law Section proposed the changes to simplify the transfer on death process and remove confusion over the rights of those holding survivorship deeds. 

See the bill and its changes to Ohio Revised Code Chapter 5302  here.     The Legislative Service Commission’s analysis of S.B. 124 is available here.   Visit this website for a good summary of the law.


This post is a reprint of a post by marrison.2 that originally appeared at OSU Extension Farm Succession Blog.
Jan
08
2010

Ohio Ag Manager Newsletter Posted

I just posted the January edition of the Ohio Ag Manager newsletter at: http://ohioagmanager.osu.edu  This month’s newsletter features this Blog (and our OSU Extension Ag Law Blog) as well as our article on the 2010 Federal Estate Tax is in Limbo which was posted here first earlier this week.  Producers should also check out the tax management articles as they do have an impact as families make their succession and retirement plans.  I highly recommend you read Dr. George Patrick’s article from Purdue University at: http://www.agecon.purdue.edu/extension/pubs/taxplan2009.pdf


This post is a reprint of a post by marrison.2 that originally appeared at OSU Extension Farm Succession Blog.
Jan
05
2010

Federal Estate Tax in Limbo for 2010

 It is 2010, and there is officially no Federal Estate Tax.  Why and for how long?  While the House recently passed a bill to reinstate the federal estate tax in 2010, U.S. Senators failed to reach a deal to temporarily extend the estate tax into 2010.  The extension proposed by the House would have kept the 2009 estate tax levels in place.  If the bill passed in the House becomes law, the first $3.5 million of an estate will be exempt from federal estate tax and the estate tax rate on the taxable portion of an estate would be 45%.  Senate Republicans want a permanent extension to a $5 million exemption and an estate tax rate of 35%.  If no compromise can be reached, we may continue with existing law.

Under the Economic Growth and Tax Relief Reconciliation Act of 2001, the federal estate tax exemption increased during the past decade from $1 million to its 2009 level of $3.5 million and the maximum rate decreased from 55 percent to 45 percent.   In 2010, there is a full repeal of the federal estate tax.  Starting in 2011, the federal exemption is scheduled to revert back to $1 million.

The lack of movement by Congress could cause a huge TAX headache for many of Ohio farm families if someone dies before a compromise can be reached.  This is mainly due to the fact there will be only a limited step-up in basis. Under current federal estate tax laws (prior to 2010), the assets of the deceased get a step-up (or step-down) in basis to the fair market val...
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This post is a reprint of a post by marrison.2 that originally appeared at OSU Extension Farm Succession Blog.
Jan
03
2010

Transferring Your Farm Business to the Next Generation Bulletin Available from OSU

OSU Extension is pleased to announce the newly revised Bulletin 862 titled, Transferring Your Farm Business to the Next Generation is now available as a resource for families to use as they plan for the future. This 89 page bulletin helps families plan for he future of their business by examining the following questions:

1) Do I want to pass my farm operation to my heirs as an ongoing business or do I want to pass it on as a group of assets?

2) How can you tell if the business is profitable enough to provide for the next generation?

3) Are there enough income and assets to provide for the older generation’s wants and needs?

4) How can you help the two generations get along?

5)What should you transfer and in what order?

6) How can you avoid paying too much income, gift and estate taxes?

This bulletin is one which each generation should read. This bulletin can be purchased at your local county Extension office for $9.25 or can be accessed for free at: http://ohioline.osu.edu/lines/bulls.html


This post is a reprint of a post by marrison.2 that originally appeared at OSU Extension Farm Succession Blog.
Dec
21
2009

Kansas State Resource Paper

We stumbled across a really nice summary article titled Planning For Farm Business Transition/Succession written by Rodney Jones, Professor and Extension Specialist, from Kansas State University.  This 19 page article was presented at the 2005 Agricultural Lenders Conference.  Topics included in this article are:  Assessing the Current Business Situation, Strategically Considering the Future, Vision & Mission Statements, Objective & Goals, Family Communication, Developing a Transition Plan, Business Structures, and Stages of Successions.  You can access this article was presented at  written byhttp://www.agmanager.info/farmmgt/planning/default.asp


This post is a reprint of a post by marrison.2 that originally appeared at OSU Extension Farm Succession Blog.

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