Sky-high farmland values and record purchases can certainly raise eyebrows. But more than just keeping an eye on headlines, farmers need to consider how increasing values impact their estate plan. Many farmers tend to undervalue their land, which usually makes up 80% of a farmer’s assets.
When it comes to estate planning, these numbers are critical. For 2022, the lifetime estate tax exemption is $12.06 million per person. Knowing that, you can plan to not have to pay federal estate taxes for gifting that amount or less to children or other beneficiaries. Otherwise, your family could owe as much as 40% in estate taxes for values higher than the limit.
Take inventory of your assets and debts and create a strong balance sheet for your farm, even if you have no intention of being done farming anytime soon.
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