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Paul is now part of the fourth generation in America that is involved in farming and hopes the next generation will be involved also. Through his blog he provides analysis and insight to farmer tax questions.
At the Northwest Ag Bankers conference yesterday Corey Brock a local attorney spoke on various issues related to estate and tax planning for farmers.
In most parts of the Columbia Basin water project a farmer is limited to owning 960 acres. If you go over this limit certain penalties will apply including possible loss of water to the excess land which can quickly destroy the value of the land. Current values for irrigated land might approach $12,000 while non-irrigated land might only fetch $500.
In his case, grandparents had set up a trust calling for land to be distributed to their heirs at a certain point in time. One of the heirs already owned 960 acres so any additional acres distributed to them would cause this penalty to apply. They are working to resolve the issue, but the point is that care must be taken to make sure that any estate documents created such as a trust is designed and reviewed for local Ag laws and rules.
Without this review nasty non-tax costs can arise.
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