Posted by Chris O'Sullivan
Whatever Congress ends up doing with the estate tax, farmers and ranchers can shield themselves from its impacts by planning ahead, an expert advises.
By using a trust mechanism that's available to everyone, a farming couple could protect a larger portion of the family's estate from taxes, said Terry Francl, senior economist for the American Farm Bureau Federation.
Farm owners can also gift a certain amount of property to their heirs each year, which over time reduces the amount of assets that can be taxed at the owners' deaths, he said.
"There are many types of legal remedies," Francl said. "For example, you can give stock to charities and so on. You get a charitable deduction and don't have to pay capital gains on them ... There's a lot of alternatives."
The options remain as Congress has entertained numerous proposals for estate tax reform this year, the latest of which is a bill by Rep. Earl Pomeroy, D-N.D., that would freeze the estate tax at 2009 levels.
Currently, the estate tax is set at 45 percent for estates worth more than $3.5 million or $7 million for a couple. If Congress does nothing, estate tax rates will revert in 2011 to pre-2001 levels, with estates worth more than $1 million taxed at 55 percent.Click here to read more....