As we move ahead into 2013, there are many uncertainties for farm families when trying to plan for the future in regards to estate planning. However, taking the first step of gathering information, seeing what assets one has, finding out what has been done to date, and communicating with everyone involved will make the final stages of implementing a plan much easier and effective when the time comes.
Currently, we have a unified estate tax and gift tax exemptions of 5 million. We also know the value of land today and how many acres we hold. At $3000 per acre, 1667 acres will put you over the 5 million dollar estate. Machinery and life insurance added to the value of land increase the estate rapidly if there isn’t a plan of action. Anything over the exempted amount is taxed at 40 percent given the current situation. Have you thought ahead as to what a plan of action could look like to keep the family farm intact and functioning for the next generation to come. Trusts, land contracts for sale, generation skipping, and other tools can be used to help navigate business dealings and focus on the end product of maintaining income for current generation and aiding in business transfer for future generations. By doing so, one can manage their wishes and maintain the lifestyle of living they had hoped for.
As you plan, keep in mind to take care of your needs first. Then you can worry about family and charities of your choice as you plan further with what is left. Average age of living continues to rise and so the amount that you need to take care of yourself continues to rise as well. According to the National Vital Statistics Reports for 2011, the average age of life expectancy for Americans is 78.6 years. The expected monetary needs continue to rise as well and our family and financial management colleague, Rebecca Travnichek, predicts one needs about 70 percent of their current income during retirement years assuming no mortgage to maintain the current lifestyle of living.
Taking the time now to analyze your financial situation will pay off in the long run when time in the future may be critical to ensuring happiness or there may just be a great deal of confusion going on at that point in time. Use the current estate planning tools such as TOD’s, POD’s and beneficiary deeds that allow transfer without probate. This allows you to maintain financial security with your assets and financial needs while at the same time passing assets to where you desire them to go at the time of death. Contact your local extension office for assistance in starting the process for estate planning and realize that it is always good to consult with an estate planning attorney for a final executable plan. Furthermore, plan to revisit your estate plan and review to make sure that it reflects your continued wishes over the years to come.
University of Missouri Extension will hold a workshop on Estate Planning starting January 16, 2013 in Chillicothe. Call the extension office for more details at 646-0811 or email Kevin at email@example.com