Monday, July 2, 2012

Are You Doing Any Estate Planning With All That Land?


This is an important topic especially for a large landowner. Your estate may be subject to estate taxes (commonly called death taxes) when you decease. I am not qualified to make recommendations but do want to bring this important topic to mind. You should seek the advice of a Certified Financial Planner  or Certified Insurance Counselor.
If you are planning to die you missed the best year, 2010 :-) !  There were no estate taxes due that year. In 2011, your estate was taxed for that amount over $5,000,000 at a federal tax rate of 35%. The amount will go up each year. Currently the amount for 2012 is $5,120,000.


There are several tools at your disposal to help with estate planning. I will only cover 2:
Gifting – Currently you can give away assets worth $13,000. That includes both a husband and wife. Each recipient (or child) will receive $26,000. If there are several children, you can reduce the estate by a sizable amount
Insurance – This sounds simplistic, but it is a great tool. You simply buy an insurance policy that is worth the estate tax bill at time of death.
            I have included a link that has a publication about Estate Planning. It is a little dated in terms of estate exclusions and tax rates but the advice is sound.


            Let’s talk basis. This becomes important when the property is sold. If you acquire the property by gifting,  your basis remains the same as the one who gifted you the property. Usually it is low because they have owned the property for a long time. Therefore a hefty capital gains tax may be due when the property is sold. If the property is inherited, you receive a stepped-up basis. Your basis is the FMV (Fair Market Value) at the time of inheritance. It is important that you have an appraisal done soon after the inheritance. I just completed a timber appraisal on a 350 acre farm in Meriwether County, GA. to help the owners with some planning! Estate Planning is important and it won't go away if you stick your head in the sand. Get good advice and start now!


For Information on Buying or Selling Land contact G. Kent Morris, ALC, RF at      (706) 457-0090

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