Agricultural Estate & Succession Planning - Brent and Connie Haden - Law Firm of Haden & Byrne, LLC, from the 2013 Missouri Pork Expo, February 13 - 14, 2013, Columbia, MO, USA. More presentations at http://www.swinecast.com/2013-missouri-pork-expo

1. ESTATE PLANNING:
WHAT SHOULD I DO NOW?
Missouri Pork Expo 2013
BRENT E. HADEN
CONNIE S. HADEN

2. WHY SHOULD I PLAN NOW?
• TAXES aren’t the only reason
• The State of Missouri has a default plan
• Minor Children
• Second Marriage
• Heirs involved in Farming Operation
• You Own a Farm!

3. GOALS
• Minimize Taxes
• Avoid Expensive and Time-Consuming Probate
• Income and Security During Lifetime
• Involve the Next Generation
• Pay for Long-Term Care Expenses (Nursing Home)
• Avoid Family Conflict
• Keep Your Operation Going
• Proper Transfer of Your Assets at Death
• Send your money where YOU want it to go

4. Property Ownership
• Individual Name
• Joint Ownership
o Joint Tenants with Right of Survivorship
o Tenants in Common
• Beneficiary Designation
o Beneficiary Deed
o Life Insurance, IRA, Investment Accounts
• Pay-on-Death (POD) or Transfer-on-Death (TOD)
• Trusts

5. Unique Challenges for
Farmers and Ranchers
• Unpredictable Income and Growth
• Land Values
• Multi-Generational Involvement
• Equal vs. Fair
• Control

7. A Word About Taxes . . .
• Estate Taxes
o Exemption = $5.25 Million
o Adjusted for Inflation
o Rate = 40%
o Portability
• Gift Taxes
o Exemption = $5.25 Million
o Rate = 40%
o Annual Exclusion = $14,000
• Generation Skipping Transfer Taxes
o Exemption = $5.25 Million
o Rate = 40%
• Income Taxes

8. Tools of Estate Planning
• Revocable Trust
• Will
• Power of Attorney
• Health Care Directive
• Irrevocable Trust
• Business Entity
• Lifetime Gifts
• Insurance

9. Tool #1: REVOCABLE TRUST
• IT CAN BE CHANGED
• “Living Trust” or “Revocable Living Trust”
• THE WORK HORSE of the Estate Plan
o Provides Organization
o Disability Plan
o Privacy
o Avoids Probate
o Simplifies Administration

10. Tool #1: REVOCABLE TRUST
• Like a Will, it provides instructions
about the distribution of assets at
your death
• Property is treated as your own for
all purposes
• Couple with Pourover Will

11. Creating a
Revocable Trust
1. Sign a Trust Agreement – “Settlor” or “Grantor”
2. In Trust Agreement, appoint yourself or
someone else to “manage” the trust property –
“Trustee”
3. Trust Agreement states how the property is
managed during your life and after your death
4. Trust can be changed or dissolved at any time
5. COORDINATE TITLE – Important Step!

12. Tool #2: WILL
• Not Effective Until Death
• DOES NOT AVOID PROBATE
• Place to name a guardian for minor children
• When combined with REVOCABLE TRUST, it is
known as a POUROVER WILL
• Provides instructions about how your assets are
to be distributed at your death
• Can also be used to create trusts that are
effective after death (“Testamentary Trust”)

13. Tool #3: DURABLE
POWER OF ATTORNEY
• Gives another person (the “Attorney-in-
Fact” or “Agent”) the authority to act for
you in FINANCIAL MATTERS
• Useful in case of Disability
o “DURABLE” just means it survives incapacity
• Effective Immediately or Upon Disability
• ONLY effective during lifetime
• BE CAREFUL – Very Powerful

14. Tool #4: HEALTH CARE
DIRECTIVE
• Also called: Living Will, Advance
Directive, Durable Power of Attorney for
Health Care
• Generally does 2 things:
o “Pull the Plug”
o Name someone to make health care decisions on your behalf
• ONLY effective if you aren’t able to express
your own wishes
• Carefully consider your AGENT
• Discuss your wishes with your Agent

15. Tool #5:
IRREVOCABLE TRUST
• “IRREVOCABLE” means it can’t be changed easily
• Very Specific Uses
o Gifting Plan
o Removing Assets from Estate for Long Term Care or Estate Taxes
o Life Insurance (ILIT = “Irrevocable Life Insurance Trust”)
• SHOULD ONLY BE DONE WITH CAREFUL
CONSIDERATION
o Loss of Control
o Loss of Income

16. Tool #6:
BUSINESS ENTITY
• TYPE OF ORGANIZATION
o Sole Proprietorship
o Partnership or Limited Partnership
o Limited Liability Company
o Corporation
o S-Corportion

17. Tool #6:
BUSINESS ENTITY
• ORGANIZATION
• LIMIT LIABILITY
• EASE OF TRANSFER
• DISCOUNT GIFTS

18. Tool #6:
BUSINESS ENTITIES
What a Business Entity Will
NOT Do:
o Solve all your problems
o Protect you from ALL Liability

19. Tool #7: LIFETIME GIFTS
• Avoid Tax
• Gift Appreciation
• Gift Income
• Gift Involvement
• Use Annual Exclusion
• Satisfaction of Knowing Property Goes
Where you Want

20. Basis
• If property gifted during lifetime – child
receives parents’ basis = “Transferred Basis”
or “Carry-over Basis”
• If property transferred at death – child
receives a “Stepped-Up Basis” to the fair
market value of the property at the parent’s
date of death
• DON’T SELL

21. Tool #8: INSURANCE
• Life Insurance
o Can be used to fund other parts of plan
o Consider an ILIT
• Disability Insurance
• Long-Term Care Insurance
o Combination Products
• Liability Insurance

22. EACH PLAN IS UNIQUE

23. “The diligent farmer
plants trees, of which
he himself will never
see the fruit.”
- Cicero
-