Trusts save slooo’s
(Continued P am Page B*!)
■ “Some people say that
whatever we.have left after
taxes to pass on to the
children is more than we
started with, and as long as
the children aren’t involved
in the business, they can
afford that luxury,” said
Ford.
But, he recalled a case
where 52 head of dairy cattle
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BENCE’S FARM EQUIPMENT GEORGE N. GROSS, INC.
RD 2 5261 Davidsburg Rd
Bedford. PA 15522 Dover. PA 17315
814-623-8601 717-292-1673
CLAPPER FARM EQUIPMENT MILLER SALES & SERVICE STOLTZFUS FARM SERVICE
RDI INC. Cochranville, PA 19330
Alexandria, PA 16611 Stewartstown, PA 17363 215-593-2407
814-669-4465 717-993-2.470
IVAN J. ZOOK
Belleville, PA 17004
717-935-2948
THOMAS L DUNLAP UMBERGERS MILL REEDY BROS. CO.
RD 1 Box 105 RD 4 Box 132 RD 4
Jersey Shore. PA 17740 Lebanon, PA 17042 Gettysburg, PA 17325
717-398-1391 717-867-5161 717-334-3710
PETERMAN FARM
EQUIPMENT, INC.
225 York Rd.
Carlisle, PA 17013
717-249-5338
were pUt on the block in
order for the children to
come up with slightly less
- than $lOO,OOO to meet the
estate settlement
obligations. As a result, the
children lost an integral part
of their productive farm
operation, and suffered a
financial hardship until they
could replace the cattle they
were forced to sell.
CHAPMAN EQUIPMENT NEVIN N. MYER & SONS,
CENTER INC.
RD2 RDI
Wescosvtlle, PA 18106 Chester Springs, PA 19425
215-398-2553 215-827-7414
- FARMERSVILLE
EQUIPMENT, INC.
RD4
Ephrata. PA 17522
717-354-4271
Ibis type of estate set
tlement ordeal, Ford said, is
like raising an elephant in
the basement. “By the time
it’s grown, you either have to
tear down the house or
dismember the elephant to
get it out. You can’t sell off
the livestock, equipment,
and inventory to meet the
tax obligations or the farm is
no longer operational.”
To avoid this dilemna,
Ford said that a trust can be
set up to maximize the
s'*
A. L. HERR & BROS.
312 Park Ave.
Quarcyville, PA 17566
717-786-3521
AGWAY INC.
Biglerville, PA 17307
717-677-7131
marital deduction exemp
tion. He recommended that
the following statement be
included in the Estate plan:
“In the event of my death,
pay out an amount of
property to my wife (or,
husband), when taken into
consideration everything she
owns jointly, that would
exactly qualify the marital
deduction, paid in dollars or
in kind.” The rest of the
estate would then be placed
in trust for the surviving
spouse’s use until death. It
then would pass on to the
children without being taxed
a second time.
By doing this, Ford
pointed out, the surviving
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M&W GEAR COMPANY, GIBSON CITY, ILLINOIS 60936
FOR YOUR NEAREST DEALER PLEASE CONTACT:
HAMILTON EQUIPMENT, INC.
WHOLESALE DISTRIBUTORS
567 South Reading Road, Ephrata, Pennsylvania 17522
Phone (717) 733-7951
Exit 54 on Interstate 81, Raphine, Virginia 24472 Phone (804) 377-2628
Lancaster Farming, Saturday, May 17,1980—83
spouse is saved the ordeal of
hearing differing opinions
from children, relatives,
salesmen, and other well
meaning people, on what to
do with the property. “It’s a
trying time for a widow or
widower—it’s a time when
they are least likely to be
equipped in making a
decision because of the
trauma of dealing with
death.”
Ford summed up his
feelings on the value' of a
trust as an estate planning
tool when he spoke of a case
involving a farm couple we’ll
call Mr. and Mrs. Corn.
Mr. and Mrs. Com had a
successful farming
operation somewhere in
Pennsylvania. When Mr.
Cora died, the couple was
somewhat prepared for they
had a will.
When the Corn’s bought
their farm in 1952, it cost
them $20,000. Over the
year’s, the farm saw new
equipment and more cattle
call it home.
When Mr. Com died, the
gross value of his estate
came to $1,145,000, including
the value of the real estate,
livestock, inventory, cash on
hand, life insurance, market
securities, and interest.
In settling the estate, Mr.
Corn’s executor took off the
necessary tax exemptions
for Mrs. Com, including
rights-of-survivorship and
marital deduction, and now
the taxable estate came to
$551,000.
Mr. Corn’s estate taxes
amounted to $191,000.
Since Mr. and Mrs. Com
did not have the legal tool,
the trust, working for them,
the remainder of the estate,
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after taxes, passed totally to
Mrs. Com. When she died
the following year, the estate
taxes due on her estate came
to $360,000, since there was
no longer any marital
deductions or rights of
survivorship.
Ford pointed out that if the
Corn’s had set up a proper
trust, it could have made a
difference in the amount of
taxes the estate had to pay.
Although the trust would not
effect the estate taxes on Mr.
Com, Mrs. Corn’s tax costs
would have been reduced
from $360,000 to $182,000, a
savings of $178,000.
Elvin Byier, a Lancaster
attorney also recommends a
trust for easing the sting of
inheritance taxes. He said
that a trust can be set up to
pay all the earnings of the
whole value of the estate to
the surviving spouse, while
setting up half of~it for the
children.
Or, he added, the trustee
(the person appointed to
manage the funds) could be
instructed to pay the prin
cipal, any interest accrued
by the property in the estate,
to the spouse to meet the
maintenance needs. “You
can set it up with the right to
withdraw $5OOO each year,
and what’s left in the estate
still won’t be taxed when the
surviving spouse dies.”
Byler told of a farm
family’s experience with the
powers of a trust. He said
that the husband died
leaving assets of $120,000.
Half of the assets had been
put into a trust, and half of
them went to his wife. The
farm itself, worth $BB,OOO,
(Turn to Page B 4)
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