B2—Lancaster Farming, Saturday, May 17,1980
Trusts save slooo’s when settling estates
BY SHEILA MILLER
UTITZ In last week’s
column we began the
complex look at an estate
planning tool called a trust.
We learned that a trust can
be used to see that a person’s
estate can be transferred In
special ways to a wife,
children, or grandchildren,
and that it is a legal tool for
catting he cost of
inheritance taxes.
We also heard that in
flation will be doubling the
value of form assets in the
next ten years if it continues
at its present rate.
With the increase in value
goes an increase in taxes
unless a plan is developed to
avoid than.
We looked at the current
legislation and found that
farm women need to take a
closer look at the titling of
assets and documenting
their unpaid contributions to
the successful farming
operation. Otherwise, unless
the wife can prove she
helped in the purchase of the
farm and its equipment,
most officials assume
everything should be in the
husband's estate.
This week we will be
checking out the Tax Reform
Act of 1976 and inflation a bit
closer.
The 1976 legislation set up
a taxation system which was
originally designed to help
n
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the small businessman and
the fanner. It allowed for a
marital deduction when a
spouse’s estate was settled
which permitted half of the
adjusted gross estate—or
1290,000, which ever was
higher—to be exempted
from taxation.
At the time, this seemed
like die federal law makers
were taking a logical step in
helping to preserve the small
farm and business. Then
inflation reared its ugly head
and threw a monkey wrench
into the works.
What happened was that a
.farm’s assets could not
exceed the $500,000 mark in
order for the 1976 Act to be of
-any use.
According to R. Darrell
Ford, of Estate Archetypes,'
Inc. in York, “inflation has
grabbed a hold of the small
farm and pushed it over the
$500,000. The 1976 law which
you have been hearing about
over the past four years, I
predict, is no longer of any
benefit to most farmers’’.
Even if the farm is worth
only $500,000, what happens
to it after the second spouse
dies. We already said the
first surviving spouse would
be able to claim a marital
deduction on 50 percent of
the adjusted gross estate of
the deceased.
Now the surviving spouse
dies, and for the second time
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in that generation the estate
is hit with taxes, both federal
and state, and this time
there are no marital
deduction exemptions.
To avoid this double
taxation, Ford recommends
that a trust be investigated
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(Turn to Page B 3)
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