Estate Tax Rules Slated to Expire at Year's End

Estate Tax Rules Slated to Expire at Year’s End

I’m KayDee Gilkey with the Northwest Farm and Ranch Report after this.

Estate Planning is often an uncomfortable topic among family farmers and ranchers. Of course as the old saying goes, the only thing we can count on is death and taxes. The best option is to plan for both.

Estate planning attorney Eido Walny shares some startling USDA statistics.

Walny: “That 70 percent of all of the family-owned farms in the U.S. which is about 98 percent of all farms in the U.S. are going to be changing hands in about the next two decades. Of all of those farms,approximately 89 percent of them -- nine out of ten of them--have no succession planning in place. Those farmers are leaving to chance and luck how successful those transitions are going to be.”

Walny urges farmers to take advantage of the current tax environment, rather than waiting until 2013 where there could potentially be sweeping tax changes.

Walny: “When there is an opportunity to do planning with a fairly limited window, now seems like really the best time to do some planning and make sure that this isn’t a lost opportunity.”

Interested a dollar figure example of a lost opportunity?

Walny: “We are looking at a risk at the end of this year, of the substantial increase in the lifetime gift-exemption amount. A transaction in 2012 that you could make for $5.13 million gift-free is going to cost you over $2.2 million in tax in 2013. The potential savings in taxes, the tax rate is going to increase from 35 percent to 55 percent. The potential tax savings is, in some cases, immense.”

I’m KayDee Gilkey with the Northwest Farm and Ranch Report on the Northwest Ag Information Network.