Families in the agriculture business in Texas may run into problems when it comes time to pass the estate on to another. Though estate tax planning woes have been somewhat reduced by the fact that $5.3 million worth of property can change hands without estate taxes, one expert says that growing complexity in the agriculture niche means there’s no one-size-fits-all estate or tax approach.
A professor from Texas A&M travels throughout Texas offering workshops designed to assist agricultural business owners in estate planning. According to the professor, a recent set of seven workshops drew in around 300 people. He reports that most individuals want information about passing their business on to one or two children while ensuring any other heirs are provided for as well.
Changes in tax laws through the years have made passing on farm property easier, says the professor. You don’t have to pay estate taxes unless property exceeds $5.3 million, and there are no capital gains taxes if someone dies. Still, constant changes in tax laws and the dynamics of the agriculture business throw many hurdles at those attempting to pass on farm property.
According to the professor, agriculture businesses have become very specialized. Each operation is different, and every family has different needs. He used to provide solutions that worked for 70 percent of those in a workshop; today, he says 30 percent may be able to use a solution, but the rest have to come up with an individual plan.
To turn a profit, the professor says you have to own more than 4,000 or 5,000 acres, making farming a large-scale endeavor. There aren’t always heirs in line who want to take on such an operation. For farmers, estate planning involves more than tax concerns. They must first decide whether the farm should be passed on intact and to whom, and then work with someone familiar with estate laws to ensure property is passed on appropriately while accounting for other heirs as desired.
Source: Ag Web, “Passing on the Farm; not Everyone Wants It” No author given, Feb. 04, 2014