The new IRS rules bring added succession planning flexibility for farmers, who have watched the value and expense of everything increase in the last year.
By Ryan Conklin, Wright & Moore Law Co., LPA
Estate taxes are such a popular topic among farm families. Farms that vary across size and scope are all concerned about managing any tax exposure that could result from a family member passing away.
Amidst all of the negative press directed at the IRS in the last few months, the agency has provided three important estate tax updates. The new guidance could provide some benefits for farm families when mapping out their succession plans.
In mid-September, the IRS raised the 2023 estate tax exemption amount to $12,920,000 per person, up from $12,060,000. With the proper filings, married couples can claim up to $25,840,000 in total estate tax exemptions for their collective estates (more on that in a moment). The estate tax exemption is tied to inflation by rule, so the massive $860,000 increase stems from the tough economic condition of the last year.
The gifting exclusion amount provides that an individual can make gifts up to $16,000 per person each year with no ramifications. The new gifting exclusion amount is $17,000 based on IRS updates. With that in mind, a married couple can give up to $34,000 of value to each child in 2023. If the gifting exclusion amount is exceeded, individuals or couples must file a gift tax return and suffer the reduction in estate tax exemption.
July brought more good news on the estate tax front. First, portability allows a surviving spouse to claim the unused estate tax exemption from his/her deceased spouse. So, if one spouse is deceased and only uses half of his/her exemption amount, with the filing of an estate tax return the unused half can “port” over to the living spouse.
Whereas previously surviving spouses had between nine and 15 months to file for portability, now they have five years to claim this election. Additionally, formal appraisals are no longer required and values can be rounded down to the nearest $250,000. These rules apply to deaths on or after July 8, 2022.
The new IRS rules bring added succession planning flexibility for farmers, who have watched the value and expense of everything increase in the last year. Your legal and tax professionals can provide more information about plan-specific impacts and whether additional action is needed.
Wright & Moore Law Co., LPA has a rich heritage in Ohio agriculture. Since 1988, our firm has proudly assisted farmers, rural residents, and landowners from all over the state with their farm succession planning and agricultural legal needs. We would be happy to discuss your family goals and how to meet them. To learn more about Wright & Moore or schedule a meeting, call 740-990-0750 or visit OhioFarmLaw.com.
These discussions should not begin and end with a developer’s offer. Identifying family goals now gives the family something to plan around.
Read More
Ryan Conklin of Wright & Moore Law continues our conversations on land transactions, discussing easements and what landowners should know before making a decision.
Read More
Conflict among family members and possible heirs threatens the farm’s survival. Possible solutions depend on the dynamics of your farm and your financial situation.
Read More
A lot of factors and personal goals can go into this decision, which we suggest discussing with your farm succession team.
Read More
In 2022, Ohio passed House Bill 397 to give farmers more security by standardizing farm lease terminations. The law helps, but only a comprehensive written lease ensures your rights when circumstances shift.
Read More
Get a 2025 estate tax outlook and find out what the farm income outlook for this year on this Ohio Farm Bureau Podcast.
Read More
An attorney from Wright and Moore discusses what he thinks is missing from farmland lease termination law and what members voted to do about it.
Read More
To ensure that your farm and family receive competent guidance, proactive scheduling will be critical in the early part of 2025.
Read More
Family matters can get messy, especially when a new member joins that family. How are those details ironed out and why is the process so important? Learn more about that and Ohio electricity’s future.
Read More
Making legal plans before a new farm partnership of any kind starts is the topic of discussion with Wright and Moore for this Ohio Farm Bureau Podcast.
Read More
