The Madison County Extension Service is sponsoring a Farmland Legacy meeting on estate and succession planning on Wednesday, August 10 at the West Tennessee Research Education Center, 605 Airways Blvd., Jackson, Tennessee. Registration starts at 8:30 a.m. and the program will conclude at 3:00 p.m. Lunch is provided and there is no cost to attend. Topics to be covered include Why Succession Planning, Family Discussion, Taking Stock, Retirement Planning, and Estate Planning. Pre-registration is needed and can be done by calling the Madison County Extension office at 731-668-8543.
UT Extension has developed materials to assist farm families and others with the challenges related to estate and succession planning. Topics from how to have a family discussion about estate planning to suggestions on how to find professional help are included in a seven chapter workbook of over 200 pages. The workbook is entitled “Planning Today for Tomorrow’s Farms” and is available on the internet and will be given to meeting participants. The workbook contains a lot of general estate planning concepts and ideas to help any family, not just farmers, to know more about the process. The workbook can be found at the website www.farmlandlegacy.org along with links to other estate planning information.
The article below is by Alan Galloway, Area Specialist – Farm Management with UT Extension.
Estate Planning Still Needed
Recent changes in the federal estate tax rates do not eliminate the need for individuals to do estate planning. The bill Congress passed on December 17, 2010 increased the federal estate tax exclusion to $5,000,000 per person and lowered the maximum estate tax rate to 35% until December 31, 2012. As far as federal estate tax is concerned most estates will not have to pay anything.
However, what happens after 2012? Just like this past year, we don’t know what congress will do. If they don’t extend the current law the exclusion level drops back to $1,000,000 and the maximum estate tax rate will rise to 55%.
One reason for Tennesseans to do estate planning is the Tennessee Inheritance Tax. Currently, the exclusion is only $1,000,000 per person in Tennessee and inheritance tax rates range from 5.5% to 9.5%. There many estates whose value will be above $1,000,000 and could incur a significant tax bill in Tennessee without good estate planning.
Even if a person’s estate won’t be large enough to owe any estate or inheritance taxes there are still many reasons for good estate planning. Without a valid Will stating how the deceased wanted their assets dispersed, an estate will be divided according to Tennessee law. These laws, part of the Code Annotated, provide directions as to what percentage a spouse and children or possibly other relatives would receive. The law establishes who is next in line to inherit an estate. A valid Will clears up confusion about who inherits and often saves the estate and heirs substantial legal costs and fees. While there are many ways to prepare a Will, it is recommended to obtain the services of a good attorney who specializes in estate planning.
While a Will is an important part of an estate plan, other documents should be included to help insure the wishes of the individual are carried out. A Durable Power of Attorney (POA) can provide for someone to handle your finances and other affairs if you are unable to do so because of physical illness or other limitations. A trusted family member or other individual with a POA can insure your bills are paid and your belongings are looked after while you are incapacitated. One important fact about a Power of Attorney is that they are only valid until you die. The person appointed as POA has no authority after your death. Your Will would specify who is the executor or executrix of your estate and they would handle the affairs.
Another recommended document is called Advance Care Directives (also called a living will or medical directives). Advance Care Directives specify what type and level of medical and other care should be provided if you are unable to say yourself. If due to injury, stroke or other ailment, you can’t tell the doctors what you want them to do, the “directives” provide caregivers with a guide of how you would want to be treated and for how long. Along with the “directives” a person can appoint a “Health Care Agent” or individual to act in your behalf to help the doctors and family members decide on the level of care. This health care agent would help insure your Advance Care Directives are followed.
An experienced estate attorney can assist with the preparation of these and other documents to insure you and your estate are handled as you desire and not how state law or others think it should be. No matter how large or small a person’s estate, there are many, many reasons to develop an estate plan to be certain matters are carried out as you would want. Dollars spent planning now might save your heirs thousands of dollars later and would reduce the stress on those you leave behind.
