The family farm has long been held as an ideal in the United States. Many states, including Texas, have a large number of family farms and farmers, and estate planning is often an important thing for them to take under consideration. This may be particularly true as of late because of the rapidly rising land values of farms. Over the past few years, farmland values have increased significantly, even while other property has lost equity.
The estate tax rate has been operating at a reduced rate since the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 set the tax rate at 35 percent with an exclusion rate of $5 million. The act is set to expire at the end of this year. Although Congress will debate extending the current estate tax rates during the upcoming year, the rates could return to the pre-2001 level of 55 percent, with a $1 million exclusion if the act is allowed to expire.
With rising land values and the potential increase in assets associated with equipment purchases and additional land acquisitions, farmers are likely to find it relatively easy to reach a $1 million estate asset value. Creating an estate plan that will address the current assets in a family farm will help to protect much of what a farmer has worked to provide for their family. The estate plan should also be updated periodically as circumstances change, including childbirth, marriage and large asset increases. Though it is unclear if the act will be allowed to expire, there are many important reasons to consider an estate plan.
Source: Iowa Farmer Today, "Estate plan review should not wait," Zoe Martin, Feb. 2, 2012