Wills, Trusts & Estates Prof Blog

Editor: Gerry W. Beyer
Texas Tech Univ. School of Law

Tuesday, November 10, 2020

Commentary: Estate tax poses clear threat to nation’s family farms

FarmFollowing a death, taxes are placed on the transfer of property. These taxes are called estate taxes. The Tax Cuts and Jobs Act increased the estate tax exemption to $11.58 million over person. This number is set to return to $5 million after December 31, 2025.

Farms with assets above the tax exemption will be heavily affected. Many times, farms will have to liquidate assets to meet estate tax obligations which pose a significant threat to farmers and ranchers because their estate taxes are based on the market value of the asset.

Thus, as agricultural land and assets often appreciate, the estate taxes can be very high. "A limitation on the estate tax exemption means that each year, fewer and fewer farm families will be protected from the estate tax– a clear risk to the continuity of family farms."

The lowering of the estate tax exemption limit will have a damaging effect on farmers and ranchers and should be taken into consideration. "By eliminating estate taxes, or making the current exemptions permanent, U.S. farmers and ranchers will be able to avoid, at least partially, liquidating inherited farm assets to meet the death tax’s financial obligations." 

See John Newton & Patricia Wolff, Commentary: Estate tax poses clear threat to nation’s family farms, American Farm Bureau Federation, October 19, 2020.

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.

https://lawprofessors.typepad.com/trusts_estates_prof/2020/11/commentary-estate-tax-poses-clear-threat-to-nations-family-farms.html

Current Events, Estate Planning - Generally, Estate Tax, Gift Tax | Permalink

Comments

in 2016, the most recent year for which data are available -- before the doubling of the exclusion amount -- there were exactly 752 taxable estates holding farmland
https://www.irs.gov/pub/irs-soi/Copy%20of%2016es02yd.xls
The farmland on those returns was valued, in the aggregate, at 3.2 billion, or about 4.25 million per return, much of it probably discounted per 2032A to special use value.

Posted by: Russ Willis | Nov 11, 2020 11:19:30 AM