If you own a business that you operate along with members of your family, your estate planning situation can be a bit complex. For example, let’s say that you have three children. One child has been running the business alongside you for years, and the other two have pursued different career paths. The business is your most valuable asset, and you want to take care of all of your children equally. How do you proceed under these circumstances?
There are estate planning solutions that can be implemented to balance inheritances. Life insurance purchases can be an option, and there are other steps that can be taken. The ideal way to proceed will vary, and this is why personalized attention is key. When you work with our firm, this is exactly what you will receive from the first moment that you walk through our doors.
Family Farms and Estate Taxes
Estate planning for farmers can be challenging as well. Some of the same situations that any business may face can exist, but there is a particular facet that is more common if you own farm.
There is a federal estate tax in place, and it carries a 40 percent maximum rate that can take a major toll on your legacy. At the time of this writing, the estate tax exclusion is $11.4 million. This is the amount that can be transferred before the estate tax would be applicable.
That is a rather significant figure, but your farm may be sprawled out over vast expanses of acreage. The real property may have been purchased generations ago when prices were extremely low as compared to the value of the land today. Even if the farm is not making your family members extremely wealthy, the land itself can be so valuable that your estate could be exposed to the death tax after your passing.
Fortunately, there are tax efficiency strategies that can be implemented to ease the burden and keep your farm in the family for the next generation and future generations to come. We can gain an understanding of your situation, explain your options to you, and help you execute a viable legacy preservation plan.
When you are planning your estate as a business owner or farmer, you should consider end of life issues along with monetary concerns. Unfortunately, many elders become unable to make sound decisions at some point in time. There are various different root causes, but Alzheimer’s disease is the leading culprit. According to the Alzheimer’s Association, the disease strikes four out of every 10 people that are at least 85 years of age.
If you are thinking that you probably won’t live that long, the statistics would indicate otherwise. The life expectancy for a 68 year old man is 85, and for a woman of that age, it is 87. The United States Census Bureau tells us that the segment of the population that was between 85 and 94 years old grew faster than any other between the years 2000 and 2010.
Durable Powers of Attorney and HIPAA Release Form
When you combine all of these facts, you can see why your estate plan should include incapacity planning documents. A durable power of attorney is a legal device that can allow you to name a person of your choosing to make decisions on your behalf in the event of your incapacitation. The “durable” designation is quite relevant, because a standard power of attorney that is not durable would no longer be in effect if the grantor was to become incapacitated.
There are financial decisions that would present themselves, and medical decisions would also be part of the equation. To account for this, an incapacity plan will typically include an advance directive for health care matters, and another durable power of attorney for financial matters. You could name the same person to act as your representative in both documents, or you could name two different people.
When it comes to the health care decision-making, a HIPAA release form should be added as well. Under federal laws, health care professionals cannot release medical records to anyone other than the patient unless this form has been executed.
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If you would like to discuss your estate planning goals with us, you can set up a consultation if you send us a message or give us a call at 802-879-7133.
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