I’m a farm girl and an estate planning attorney. So naturally, I’m passionate about helping farm families efficiently transfer ownership of their land, buildings and equipment to the next generation.
Too often I sit down with farming clients who m
isunderstand the estate planning process. Their misunderstanding is usually the result of overhearing inaccurate information. Perhaps they’ve heard a couple neighbors discussing death taxes and loopholes at the grain elevator and pick up some more chatter at the local diner. This secondhand advice, while perhaps well-meaning, will inevitably become their estate planning downfall.
In this five part blog series, I’m exploring several common examples of estate-planning-gone-wrong for farmers. Read on as I address one of the most common mistakes I hear when counseling farm families in the estate planning process.
Mistake #1: “I’m going to give away the remainder interest, but hold on to the life estate to retain control and income stream.”
The only goal this plan accomplishes is avoiding probate administration. Retained interests such as this cause 100 percent of the value to be taxable upon the death of the life estate holder by both the Federal Estate Tax and the Indiana Inheritance Tax. This is not a good plan for someone trying to minimize death taxes.
Remember to check back tomorrow to learn about another common estate planning mistake I often hear: “I plan to title my property jointly with my children and their spouses so that it automatically passes to them at death.”
Estate planning is important for all families and business owners, but it is crucial for farmers. If you have questions about the role estate planning plays in your family farm, please contact Bingham McHale attorney Polly Dobbs.Go to blog homepage >>