Securing One's Assets for the Road Ahead - Kentucky Farm Bureau

Securing One's Assets for the Road Ahead

Posted on Jul 9, 2024

The quote, “Nothing is certain but death and taxes,” is often attributed to Benjamin Franklin. However, it can be applied to everyone, in one way or another.  

Having the proper arrangements in place that will ensure assets, be they places or personal property, will be distributed according to the will of the owner, can help with the decision-making processes at a difficult time. One sure way to make that happen is with the help of estate planners.

Kentucky Farm Bureau offers estate planning as a member benefit but often members are surprised to learn about that, according to Josh Wilson, one of the two KFB estate planners who serve the state.

“There have been estate planners with Farm Bureau dating back to the early ‘70’s, but I think some people are still surprised about that,” he said. “However, most clients we sit down with and talk to one-on-one come from the local agent as a referral. We are not attorneys nor are we CPA’s but we do work closely with these other advisors with the goal of doing all we can to put each client in a better position.”

Once that referral happens, Wilson, along with his counterpart Brent Hall, can speak with a member about their wishes and the tools that are available to ensure their requests are secure.

“A person works their whole life to gain the assets they have and will want to build a plan that is their own,” Wilson said. “And everybody's plan is going to be an individual and is not going to be the same thing as someone else. But if you don't make a decision to make a plan of your own when the time comes, the state has got one for us, and typically, that's not the best outcome.”

Basically, estate planning involves the management of distribution for a person’s assets to ensure they that go where that person wants when they pass away, Hall noted.

“Many people may have a will but there are also other things involved with estate planning; a trust would be one of them,” he said. “A trust is a legal document that arranges for a trustee to these assets on behalf of the beneficiary. It can be used for different purposes such as supporting probate, minimizing estate taxes, or providing the needs of beneficiaries.”

 Many people also have a power of attorney document which grants someone the authority to make financial or healthcare decisions on their behalf, in the event that person is unable to do so.

Hall added that estate taxes are a big part of what the estate planners help with, as well.

“Estate planning can help minimize those taxes that may be imposed on somebody when they pass away, ensuring that more of your assets go to your chosen beneficiaries,” he said.

From an agricultural perspective, and in making sure the family farm remains a farm and in the hands of the right people, having the details within one’s estate plan is a way to keep these operations in business for generations to come.

KFB is moving forward with its Kentucky Farmland Transition Initiative which helps farm owners find available resources that help to keep their farms as farms. Estate planning is one resource that could be utilized to ensure that happens.

“The best thing, in my opinion for a farm family to do, especially to protect that farmland, is trust-based planning as opposed to a will,” Wilson said. “It does a couple of things. It gives the family, or the next generation, asset protection. So, if they're sued on a personal level, the farm's still going to be protected, and they're still going to be able to use that farm for an income source. But it also makes it harder to sell based on what kind of stipulations or guidelines you put into that trust. Setting up a trust really gives you control of those assets even after you're gone. It's a great way to protect that family farm for the next generations.”

Another advantage is when a farm is put into a trust the step-up basis is still retained at death. Current step-up basis law allows heirs to step up their cost basis on inherited property to match the value on the date of the previous owner’s death, meaning that only capital gains above that point could ever be subject to income taxes.

If the beneficiary has to sell for some reason, they're not having to pay quite the same amount in capital gains taxes, Wilson emphasized.

“Our job is to figure out how to transition this over to the next generation when looking at farms that have been in the family for years,” he said.

Hall pointed out how much more valuable land is today making estate planning all the more important.

“Land now is worth a lot more than it was two generations ago and planning to protect those assets from creditors, taxes, and possibly potential family members who want to try to disrupt the farm is important,” he said. “If somebody such as a parent passes away, and they have two other children who just want the financial value of the farm. It puts a burden on a child who wants to continue that farm. So, we work with our clients to ensure things like that don’t happen.”

Looking at transferring a farm after someone passes away, especially from a tax perspective, having a plan in place can help to avoid many issues associated with that transition.

“A lot of times these farms are worth so much money nowadays, and many times they have an estate tax problem,” Hall said. “It could come to the point where you may have a generation that's going to have to borrow money or sell a portion of the farm just to cover the estate taxes. There are many ways around that and a lot of things that we do as an estate planner that will protect them.”

To begin the process of estate planning, both Wilson and Hall recommend members reach out to their local KFB agent to get the process started.


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