Managing for Today and Tomorrow
Succession, Business, Estate, and Retirement Planning for Farm and Ranch Women
Managing for Today and Tomorrow
Estate Planning
Part One
Estate Planning Concepts and Tools
Managing for Today and Tomorrow
Succession, Business, Estate, and Retirement Planning for Farm and Ranch Women
What is Estate Planning?
The overall process of making
decisions as to how property is to
pass to others, during one’s
lifetime, at death or after death.
Managing for Today and Tomorrow
Succession, Business, Estate, and Retirement Planning for Farm and Ranch Women
Who Should Do Estate
Planning?
• Everyone… It is not just about money.
• Unless you are happy with the plan
your state has provided.
Managing for Today and Tomorrow
Succession, Business, Estate, and Retirement Planning for Farm and Ranch Women
We Are Not Giving Legal Advice
• Just providing nonbiased educational
information.
• Seek out your own legal council.
Managing for Today and Tomorrow
Succession, Business, Estate, and Retirement Planning for Farm and Ranch Women
Who is the Estate Plan for?
• Is it to pass a business to the next
generation?
• Is it to plan for retirement?
• Is it to jump start the kids’
ambitions?
• Is it to avoid taxes?
Managing for Today and Tomorrow
Succession, Business, Estate, and Retirement Planning for Farm and Ranch Women
What are your most
important goals?
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Individual
Family
Retirement
Business
Spiritual
Other
Managing for Today and Tomorrow
Succession, Business, Estate, and Retirement Planning for Farm and Ranch Women
Key is to Articulate Goals
• The parents
together
• The parents
individually
• The on-farm heirs
• The off-farm heirs
Managing for Today and Tomorrow
Succession, Business, Estate, and Retirement Planning for Farm and Ranch Women
Develop Goals under
Various Circumstances
• What to do if spouse dies  Receive income?
 Sell interest?
 Participate in management?
• What to do if both die?
• What to do if entire family dies?
Managing for Today and Tomorrow
Succession, Business, Estate, and Retirement Planning for Farm and Ranch Women
Common Estate Planning Goals
• Minimize taxes at death.
• Minimize probate costs and delays.
• Conserve property during life and after
death in accordance with goals.
• Provide financial security:
 Parents in retirement.
 Family member with a disability.
Managing for Today and Tomorrow
Succession, Business, Estate, and Retirement Planning for Farm and Ranch Women
Key Areas of Concern
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Guardian for minor children or adult children with
special needs.
Providing income for a surviving spouse or children.
Management of estate property, assets, investments.
Minimization of probate and settlement expenses.
Minimization of estate and inheritance taxes.
Flexibility.
Liquidity for necessary and unavoidable expenses.
Gift planning.
Continuation and/or transfer of the business.
Managing for Today and Tomorrow
Succession, Business, Estate, and Retirement Planning for Farm and Ranch Women
Put Together a Team of Advisors
• Start with referrals and interview potential
advisors
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Accountant
Banker
Insurance agent
Investment advisor
Lawyer
Financial Planner
http://www.extension.iastate.edu/
agdm/wholefarm/pdf/c4-61.pdf
Managing for Today and Tomorrow
Succession, Business, Estate, and Retirement Planning for Farm and Ranch Women
Getting Started
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Determine what you own and how much it is worth.
Who do you want to receive your bounty?
When do you want them to get it?
Review any past estate planning.
Review of family insurance program.
Advisability of lifetime gifting.
http://www.extension.iastate.edu/agdm/info/eyep/c4-57.pdf
Managing for Today and Tomorrow
Succession, Business, Estate, and Retirement Planning for Farm and Ranch Women
Important Considerations
• Type of Assets
 Inventory
 Depreciable
o Machinery & Equipment
o Permanent Improvements
 Real Estate
o Land
o Personal Residence
• Tax Basis
• Alternative forms for disposing of property
during life
Managing for Today and Tomorrow
Succession, Business, Estate, and Retirement Planning for Farm and Ranch Women
Fair Market Value of Real Estate
• You may be pleased!
• May be one of your greatest stores of wealth.
Managing for Today and Tomorrow
Succession, Business, Estate, and Retirement Planning for Farm and Ranch Women
Ownership / Control
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Fee simple
Life estate or life tenants
Remainder interest.
Leaseholds
Tenants in common.
Joint tenants with right of survivorship.
Managing for Today and Tomorrow
Succession, Business, Estate, and Retirement Planning for Farm and Ranch Women
Forms of Co-ownership
Tenancy in common:
• Each tenant holds an undivided interest in
the property.
• Upon a tenant’s death, the interest passes in
accordance with the tenant’s will (or state
law if no will.)
• The decedent’s estate includes only the
decedent’s interest.
Managing for Today and Tomorrow
Succession, Business, Estate, and Retirement Planning for Farm and Ranch Women
Forms of Co-ownership
Joint tenancy:
• Passes by survivorship designation.
• Precludes use of life estate/remainder
arrangement as to non-marital portion of the
estate.
• Magic words of conveyance.
• Takes precedence over the will.
Managing for Today and Tomorrow
Succession, Business, Estate, and Retirement Planning for Farm and Ranch Women
Forms of Co-ownership
Tenancy by the entirety (not allowed in all
states):
• Husband and wife can together convey a fee
simple but neither can unilaterally sever the
tenancy.
States may have other forms of
ownership as well.
Managing for Today and Tomorrow
Succession, Business, Estate, and Retirement Planning for Farm and Ranch Women
Estate Planning Implications
of Property Ownership Forms
• Spousal joint tenancies:
 The property is treated at the first death
as belonging 50% to each spouse for
federal estate tax purposes.
 “Fractional share” rule.
Managing for Today and Tomorrow
Succession, Business, Estate, and Retirement Planning for Farm and Ranch Women
Estate Planning Implications
of Property Ownership Forms
• Non-spousal joint tenancies:
 Property is taxed in the estate of the first to
die except to the extent the surviving owner
proves contribution for its acquisition.
 “Consideration furnished” rule.
 Property included in decedent’s estate
receives a new basis at death.
Managing for Today and Tomorrow
Succession, Business, Estate, and Retirement Planning for Farm and Ranch Women
Class Activity
Find the
Legal Terminology Vocabulary Matching Exercise
and complete
Managing for Today and Tomorrow
Succession, Business, Estate, and Retirement Planning for Farm and Ranch Women
Homework Assignment
• Find “Last Will and Testament”.
• Find ten of terms listed in the Activity
Worksheet in your will.
• Check the titles on all real estate to see how
it is owned.
• Review the Estate Planning Questionnaire
found in the book.