Many farmers and ranchers that are nurturing hundreds of acres of property were relieved when lawmakers announced the 2013 estate and gift tax legislation
Many farmers and ranchers that are nurturing hundreds of acres of property were relieved when lawmakers announced the 2013 estate and gift tax legislation, which made it significantly less costly to pass down land and assets to successors and new generations. However, given that today’s farming producers own significant swathes of land – most of which has been in their families for generations – some are lobbying for more flexible rules that will make wealth transfers easier.
Under the existing estate and gift tax laws, farmers can pass $5 million – $5.25 million, once indexed for inflation – in farmland, equipment, and other assets to successors without triggering estate taxes. This is a significant allowance, as the allowances were initially set to revert back to the 2001 rate of $1 million. The current exemption doubles to $10.5 million for joint filers. In addition, lawmakers also raised the gift tax threshold to $14,000 – or $28,000 for married joint filers – up from $13,000 in 2012.
Duane Hund, an extension farm management specialist with Kansas State University, notes that the changes are uniquely positive for farmers, as potential taxes on property over that amount are capped at 40 percent, or 10 percentage points lower than if Congress hadn’t acted, according to the Kansas City Star. Further, Hund noted that the portability of the exemption is a new feature that will greatly facilitate wealth transfers for farmers. The new portability rule means that should a husband or wife pass away and leave an estate that is smaller than the $5.25 million exemption, the surviving spouse can add the unused amount to her or his own $5.25 million exemption at the second death.
Although farmers and ranchers are in a much better position, the American Farm Bureau is lobbying lawmakers to repeal the federal estate tax altogether.
“Individuals, family partnerships and family corporations own 98 percent of our nation’s 2 million farms and ranches,” said AFBF president Bob Stallman. “When estate taxes on an agricultural business exceed cash and other liquid assets, surviving family partners may be forced to sell land, buildings, or equipment needed to keep their businesses running.”
Why Every Business Should Conduct an Annual Insurance Coverage Review
Most New Jersey business owners purchase insurance policies, file them away, and assume they are protected if a claim arises. Without a regular insurance coverage review, many companies discover gaps only after a lawsuit, cyberattack, property loss, or other significant event occurs. An annual insurance coverage review can help businesses identify potential risks, ensure their […]
Demand Letters & Cease and Desist Letters: When to Send One (and When Not To)
Businesses and individuals often encounter situations where another party breaches a contract, fails to pay a debt, or continues harmful conduct. In many such disputes, a precisely drafted demand letter or cease-and-desist letter serves as a powerful legal tool. It can frequently resolve the dispute and avoid litigation. While demand or cease-and-desist letters can resolve […]
Key provisions in your contracts, including those relating to indemnification, insurance, and defense, are essential to contract risk management. While sometimes considered “boilerplate,” these provisions play a pivotal role when determining which party is responsible for certain costs and liabilities. They must always be negotiated and drafted carefully. Indemnification Clauses Businesses should never overlook the […]
Portability of estate and gift tax enables a surviving spouse to inherit any unused portion of their deceased spouse’s federal estate and gift tax exemption. So, if one spouse doesn’t utilize their full exemption, the surviving spouse can effectively double their exemption amount with regard to estate tax liability. For married couples, portability offers a […]
Pet Trusts in New Jersey and New York: A Practical Estate Planning Tool
For many of us, pets are more than companions—they are members of the family. Yet they are often overlooked or inadequately provided for when it comes to estate planning. A pet trust offers a legally enforceable way to ensure that your animal continues to receive proper care if you become incapacitated or pass away. As […]
For many New Jersey business owners, a closely held company represents decades of work, financial investment, and personal sacrifice. Trusts in business succession planning are one of the most effective tools for protecting that value, allowing founders to control how and when the business passes to the next generation while reducing the risk of disputes, […]
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Sign up to get the latest from our attorneys!
Explore What Matters Most to You.
Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.
Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.
Let`s get in touch!
Sign up to get the latest from the Scarinci Hollenbeck, LLC attorneys!
