estate

The news today is about estate tax. When I first started in the finance business the estate tax limit was set at $200,000. This meant that when you died the government totaled up everything you owned and if it came to more than $200,000 you had to pay tax which started at 35% and went as high as 55%. We would call on farmers and help them prepare for this event. For example most farmers and asset rich and cash poor, meaning they owned land and equipment that might be worth millions but the price of commodities was so low that they barely made enough to get by. When they died the estate tax was due in 9 months so part of the farm had to be sold to pay the tax. Now a farm is a unit with equipment sized to the acreage and when part of it is sold it disrupts the whole operation. Many times this resulted in the farm being sold to some large corporate farm and as time passed we had fewer and fewer small farmers and that trend continues to this day.

About 30 years ago they raised the tax limit from $200,000 to $600,000 and that helped a lot and then it went to $2,000,000 and the Bush tax cuts of 2001 removed the estate tax completely until this January one when the new bill suggest $5,000,000 for individuals and $10,000,000 limit for couples and at tax rate of 35%.

This is the kind of bill that will protect most small farmers and most very rich people have professional estate planners who limit their tax. For those who have that much money and still don’t plan, I say let them pay