B Brocken's fig Advice ) Estate Planning - V Last week, I discussed taxes and executors in estate planning and settlement. One final word on executors; it is not a position to be treated lightly and should not be handed out as an honor. An estate executor is the deceased persort’s personal representative. Co WRAP UP YOORFUf CONTROL PROBLEMS ON THAT OLD EARTAfi New Ectibarr Tape 70 FLY STIK Flytrap Fly Control For: • Barns • Stables • Dairies • Hog Operations • Homes • Patios • Gardens * * AARON $ By John E. Brockett Farm Management Agent Lewistown Extension Office FARM & DAIRY STORE RD 3. Ephrata, PA 17522 (Hinkletown) Phone (717) 354-4631 GREEN Store Hours ■ Mon.. Thurs & Fn. 7 A.M to 9 P.M CT A mi DC Tues. & Wed. 7 A.M. to 5 P.M.; Sat. 7 A.M. to 4 P M * 1 executors may be necessary to gain all of the required attributes. Insurance Insurance can be a useful estate planning tool. It can also be an expensive problem if it is not properly set up or the type of policy is wrong for your situation. If in surance is owned by the deceased. CONTROL FLIES WITH A FOGMASTER AND HOFFMANS FLY SPRAY poSSen] ECI FLY BOMBS FOR MILK HOUSE AND ANIMALS Kills house flies, horn (lies stable flies gnats and roaches GROFF & SON "g"' it becomes part of the estate. As part of the estate, it offsets some or all of the liabilities that could reduce the estate value, if the insurance policy is owned by the beneficiary, the proceeds could still be used to pay liabilities, but the insurance would not be part of the estate. Example; A widower named John Farmer, who has assets worth $500,000 and debts of $200,000, has a $200,000 insurance policy. At his death, his son inherits the farm. At the present time, the value for Federal tax purposes is $500,000 which means a net tax of $75,000 if he owned the insurance policy with his son as beneficiary. If the son owned the C starter) IMPROVED FLY BAIT ECI FLY BOMBS DAIRY AEROSOL policy, the net value of the estate would be $300,000 which means a net tax of $B5OO. Furthermore the stepped up basis for income tax purposes would be the same for both situations. Some insurance agents look solely at the future and are con cerned with life long protection and/or retirement. Thus a farm family could be under protected for disaster early in their career when debts and other obligations are high. Reason - available cash can only pay for 20% of the necessary coverage it is for a whole life policy. What are some possible solutions? They all hinge on working with a knowledgable insurance agent. By knowledgable, I mean someone who understands farm business as well as the in- Look for the “REAL’ Seal on Milk Lancaster Farming, Saturday, June 18, 1983—C7 surance business. If part of the sales pitch is “look how small of an amount of your milk check or farm income is represented by the premium”, the agent is not knowledgable. He or she does not understand that as much as 90 percent of your cash farm income goes out as operating expenses or debt service. A knowledgable insurance agent starts with your business and asks what is the purpose of insurance now, in ten years, and over the long haul. Another logical question is what is the availability of cash with which to pay premiums? Finally, can I build a program that will fit into the family budget and come as close as possible to meeting im mediate needs. A final word - it costs nothing to talk to several agents.
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