Estate Planning Tools for Family Farmers and Ranchers Family farms and ranches face some of the same estate planning obstacles as any other business; however, there are some aspects of estate planning that are unique to the family farm or ranch. If you own a family farm or ranch, and plan to pass it down to future generations, careful estate planning is critical to avoid losing your farm or ranch to estate taxes. A farm or ranch is often at risk for losing assets upon the death of the owner because while the estate may actually include valuable assets, such as land, it is also frequently heavily in debt. The end result may be that the estate is subject to estate taxes, yet there are no liquid assets available to pay the taxes, forcing the sale of estate assets. The following estate planning tools may help you transfer some of your farm or ranch assets on to future generations prior to your death which will help avoid estate taxes. Gifting: Taking advantage of the yearly gift tax exemption and lifetime exclusion can help pass on the farm or ranch. Just make sure you are aware of the current lifetime exclusion amount so that you do not incur gift taxes. Marital Deduction & A/B Trust: This can be used to pass your half of the farm or ranch to your children while retaining income for your spouse. This allows you to use both your marital deduction and that of your spouse, by leaving your half in a trust that your spouse can benefit from but which will not be included in his or her estate upon death Family Partnership: Creating a family partnership that is funded by the farm or ranch assets can help pass your interest on to your children prior to your death through gifting interests in the partnership GRAT: The Grantor Retained Annuity Trust is a complicated, but extremely useful, estate planning tool. Essentially, you may be able to transfer the farm or ranch assets into the trust, retain the income from the trust, and then pass on the assets to your children at a discounted valuation at the termination of the trust Each of these estate planning tools has specific rules that must be taken into account when planning your estate. Be sure to talk to your estate planning attorney to determine how best to pass down your family farm or ranch without subjecting it to estate taxes. Experienced estate planning attorneys St. Louis MO of the Purcell and Amen, Attorneys at Law – Your Estate Matters, LLC offers estate planning and business planning resources to residents of St. Louis MO. To learn more about these free resources, please visit http://www.yourestatematters.com today.
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