Much has been said about the federal estate tax, but the myths are not especially the truth. Careful estate planning is the key to unraveling the myths and truths of the âdeathâ tax.
Dr. Marsha Goetting, professor and family-economics specialist in the Department of Agriculture and Economics at Montana State University, told the Missoula Independent that seven out of ten Americans die without a will. Goetting continued, âThere's almost a stick-the-head-in-the-sand approach. It's dealing with death, and who wants to think about dying?â
The Missoula Independent reports that a $1.5 million exemption is currently allowed on the estate of a single parent and $3 million on the estate of a husband and wife. In 2006, these limits will go up to $2 million for a single parent and $4 million for both parents.
Estate values under these limits will be passed on, tax free, to heirs. Estate planning will further reduce the taxes levied on estates. Goetting states in the Missoula Independent, that with the current estate tax law in effect, only 0.05 percent of Montana estates will pay the tax by 2009.
President Bush said in Iowa last April, âThe death tax is bad for rural America and Congress needs to make it extinct forever.â The Missoula Independent reports that Rep. Denny Rehberg (R-MT) said, after the 2003 vote to repeal the estate tax, âThe effects of the death tax results in nothing less than the killing of the American dream.â
Offering another side to the argument, Dr. Neil Harl, professor of agricultural economics at Iowa State University, told the Missoula Independent that repealing the estate tax is an opportunity for the nation's super-rich to continue to concentrate wealth, which is bad for the economy and bad for the country. âThe deficit is so large, we cannot afford to lose the $20 billion or so the estate tax is generating.â
Harl, also a leading national agricultural finance expert, told the Missoula Independent that some very rich people, with some very powerful friends in Washington, don't want to have to pay up. Harl continued, âWhen you look at the data, the impact [of the estate tax] is the greatest for those who have more than $20 million in assets. Those are the people who are buying up large swaths of North and South Dakota, Montana [and] Wyoming. Those are the Ted Turners of the world. The number of ranches and farms that are affected where the decedents are running a family-type operationâand not a huge land-ownership ventureâis really very small.â
The goal of the Golden Age Farming pilot program, currently being promoted by the University of Missouri Extension Office, seeks to educate farmers on the benefits of estate planning. The Galesburg Register-Mail reports that the course sessions, lead by a former accountant, concentrate on numbers, goal setting, living wills, durable power of attorney, long-term care health insurance, and establishing succession plans.
Succession is important to most farmers, almost as a culture. They sweat to raise their crops, cattle, and kids. Dave Wedman, a farmer, has lived on his Danville, Kansas farm his entire life. Their three kids worked with Dave when they were growing up, but the children are now gone. Dave and his wife Carla don't expect them to come back to work the farm. Carla told KWCH 12 Eyewitness News, âI don't want Dave and I to be the last ones on this farmâ¦â