Estate Planning and Conservation Tools

Transcription

1 Working Forest Summit for North Carolina Landowners Improving Forest Health - Building Family Wealth Estate Planning and Conservation Tools

2 Estate Planning & Conservation Tools Mark Megalos, NCSU Forestry Extension

3 1 - Profitability THIS TALK Build it into Your Management Plan 2 - Family Legacy Uncle Sam s Policies 3 - FOREST ESTATE CONSIDERATIONS EXAMPLES 4 RESOURCES 5 - SUMMARY

4 Forest Plan Sets Direction for Action Adopt a Business Approach Which actions Pay their Way? Build on Profitability Build Ownership in Early Share the legacy!

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6 FAMILY LEGACY 70+ % L.O cite Family Estate to Pass on to Heirs as prime reason for owning land Wanting to protect/pass an Estate is nearly universal In press: NC forest landowners w 10 + acres NWOS

7 Federal Estate Tax The $5 million estate and gift tax exclusion is permanent. The exclusion is inflation indexed 2014 $5.34 million 2015 $5.43 million 2016 $ 5.5 million The Tax Institute estimates that only 1% of estates will be taxable.

8 Federal Estate Tax Taxable estate rate increased to 40%. Portability election is permanent Unused portion of deceased spouse can be used by surviving spouse Essentially Doubles Estate exemption to $11 million for married couples Election is made on a timely filed estate tax return (includes extensions)

9 Gift tax issues Annual gift exclusion is $14,000 for 2015 Lifetime gift exclusion amount is the same value as the estate tax exclusion, $5.43 million for m.in 2016? A powerful tool for business succession

10 Let s Start Narrowing Your Goals! Need cash (now or later)? Want to protect the land / timber? Do your children want to protect the land from subdivision and development? Want to give all or part of your Land / Timber $$ to charity?

11 Family Legacy / Buy-in Growing Families, Not Just Trees, ATFS

12 Copy in your folder Working Lands Guide

13 Family Legacy: Estate Planning Review property ownership, insurance needs, and family business structure 4 Steps 1. Develop your vision for the future 2. Determine needed future income 3. Gather info on your resources 4.Execute instruments and agreements

14 Sustaining a Legacy

15 Self-assessment

16 Family Legacy: The Family Meeting Who s at the table? When to meet? Where to get together? What to prepare?

17 Copy in your folder Working Lands Guide

18 Some Potential ESTATE OPTIONS

19 Estate Option #1 WILL A last will and testament is the simplest and least expensive method of active estate planning. Avoids loss of income and tax benefits Peace of Mind Sound, Cool-headed, Deliberate

20 Estate Option #2 Partnership - or LLC Mechanism to share ownership while keeping land intact. Liability differs by type. Undivided interest in assets Can Simplify Gifts (Shares vs Acres) Can be established Now (test viability) or Later (control while here)

21 Estate Option #3 Sell or Gift to Heirs Immediate transfer options for TODAY. LAND or TIMBER or BOTH. Gifts Retain your Basis Sales- Establishes new FMV Basis Can SELL Timber NOW and share $$ as $14 K /year

22 Estate Option #4 Term or Conservation Easement Maintains ownership while restricting development, subdivision for term or forever. Tax Benefits Potential for Revenue Can Reduce Estate Valuation Provides for Certainty (Now & Future)

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26 Estate Option #5 Sale to Public Entity Direct Sale or Bargain Sale to public entity. Immediate Revenue Potential Tax Avoidance- Bargain Solves Potential Estate Problems Provides Finality

27 Estate Option # 6 Institutional Planned Giving: Multiple options exist to donate real estate while providing annuity returns for retirement. Gift annuity, deferred gift annuity Annuity trust, Unitrust ( Charitable Remainder) Sale, or gift and sale.

28 Estate Option # 7 Al a Carte Selection of Options 1-6 MIX AND MATCH Remember Each Estate Plan in UNIQUE Matches Your Objectives Online Calculators abound to test the waters before you decide

29 Many Hands Make Light Work

30 Get Started Now! List All Assets: Accounts,Insurance Policies, Mutual Funds, Retirement Accounts, Business interests, Partnerships, Real estate (appraisals) Name/Address/Phone of attorneys, accountant, financial advisor, insurance agent, next-of-kin or preferred contact Separate list of preferences of final arrangements

31 GET YOUR FILES IN ORDER

32 Put A Team Together Now! Seek professional help! Attorney ( Estate Specialist) Banker / Trust officer (as needed) CPA / Tax Advisor / Estate Planner Insurance representative Forester/ Farm Consultant

33 Institutional Help is Available: Many Colleges, Churches, Universities and other Nonprofits have Estate Planning if a portion or majority of your estate is left to them. A range of options are available depending upon your needs: Life Income Gifts, Charitable Remainder Trusts, Retained Life Estate, etc.

34 Remember: Estate Planning Isn t A D-I-Y project Estate Plans = Ongoing Process Choose an Administrator State Your Preferences

35 Remember: You won t take it with you!!! But, YOU can plan NOW for: a smooth transition for family, friends, and causes that matter to you Your UNCLE has a plan if you don t make one!

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39 Resources: Your land, Your legacy s/pdf-doc-ppt/ylyl_web.pdf TIES to the LAND Running Successful Farm-Family Meetings

40 THANK YOU!!!

41 QUESTIONS?: Mark Megalos Extension Associate Professor Ph.D. NCRF #728 ph; fax: