What’s this
( If (Continued from Page B 2)
of a Hershey bar was 5 cents.
In 1970, the cost had gone up
to 25 cents, an increase of
10.6 percent.
He projected the cost of
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that same chocolate bar to
be 68 cents in 1989, and $l.BB
by 1999, assuming the same
rate of inflation.
Going back to 1936, again.
Ford pointed out the cost of a
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Hershey bar was 3 cents.
One depression and world
war later, plus a little over a
decade, found that piece of
candy costing 5 cents in 1962,
an increase of 2 cents in 26
years.
From 1962 to 1970, the cost
increased 20 cents in 8 years.
The important thing isn’t
how much the cost of a
chocolate bar has gone up,
said Ford, but what effect
the inflation has had on the
price of machinery and land.
“Inflation will most
assuredly exist in the
future,” he said. “The land
that you are farming is in
creasing to the point that the
government has an excellent
handle on putting inflation
into your estate taxes. I
predict that in 20 years you
will owe an estate settlement
tax more than you’re worth
today.”
Ford stressed that at the
current rate of inflation, 12
percent, the value of a farm
will double in 6 years. The
significance of that is all
those assets are titled, by
and large, and so to get those
assets to the next generation
they have to go through
estate settlement, both state
and federal, he said.
Giving an example of a
typical farm, today, Ford
said it would be worth
around $300,000 in total
assets. Using a conservative
inflation rate of 7 percent,
that same farm woud be
worth $600,000 by 1990, and
by the year 2000, it would
have a value of $1,200,000.
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This is where the trust, as
a tool, is essential inorder to
keep that farm m the family
Ford pomted out tiuu w
trust can be used only on
property owned absolutely
by the donor. That is also
known as B-simple
ownership, and it is the basic
type for an individual
owning property.
“If you inherited property
from your parents, and if it
was never retitled to include
a spouse or child, you own it
absolutely,” Ford said.
Absolute ownership differs
from jomt tenants by the
entirety or tenancy in
common.
Jomt tenants by the en
tirety means that the
husband and wife each own
it all, meaning a right to
survivorship—when the
decedent dies, that property
passes 100 percent to the
surviving spouse.
This type of ownership is
the way the majority of
property is owned between
husband and wife, Ford said,
but it creates a hidden
inequity in the estate tax
law. “At the death of one of
the holders of a property
owned jointly by the en
tirety, all the property goes
into the estate of the first to
die, unless the survivor can
prove contribution for
purchasing the farm.
“We live in a chauvinistic
society because unless there
are W-2’s or 1099 forms for
the wife, or unless she
inherited property, she
cannot show contibution
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even though she worked side
by side with her husband on
the farm.
“In the Revenue Act of
1978; the government
developed a r smedy called
credit for the surviving
spouse.”
This allows for a wife to
indicate marital par
ticipation in the farm
business. She can claim 5
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percent interest in i
operation over a 10 y(
period with prop
documentation.
What is considered pro]
documentation? Rich;
Dennison, of the Pei
sylvania Farme
Association’s Legal Servii
Department recommence
(Turn to Page B 4)
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