Vermont farmers are some of the hardiest of an already hardy lot. As a farmer you know how hard it is to succeed against tough odds, but you do. Successfully passing along the family farm to your heirs however may be another story.
The federal estate tax applies to estates over $5,250,000, and the State of Vermont estate tax begins at $2,750,000. Surprisingly, your farm could be close to those values. Consider the value of your land and the value of all the equipment you own. It starts to add up quickly. As a farmer’s life is a constant cycle of debt and repayment with each year’s crop, you may have forgotten just how much money you have spent acquiring all that equipment. Because you are so connected to the land, you may not have considered its monetary value.
Federal estate tax law does provide some breaks for family farms; however there are restrictions on what is considered a farm. You must have farmed five of the eight most recent years, and for your heirs to have the land considered as farmland, they will have to be farmers for an additional 10 years. They may not be willing to make such a sacrifice.
Sometimes it can be very expensive when you try to get off too cheaply; you don’t want that to happen to those you love when you are gone. Federal law allows for what is called recapture. Land previously valued as farmland as opposed to its highest possible value will be assessed at its actual sale price for estate tax purposes. Vermont will follow the federal lead in this matter. Estate planning can allow you to leave your heirs’ options open.
Stephen Unsworth
Latest posts by Stephen Unsworth (see all)
- Can an Irrevocable Trust Be Changed? - March 25, 2019
- Estate Planning for Family Owned Businesses and Farms - March 18, 2019
- What Are the Responsibilities of the Probate Court? - March 6, 2019
