Author Topic: Inheriting Farm Land  (Read 2021 times)

Neurogeek

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Inheriting Farm Land
« on: January 23, 2015, 11:45:11 AM »
My father was recently diagnosed with cancer. He and my uncle co-own 150 acres of farmland in upstate NY that was passed down via my grandfather, a dairy farmer. Since then, the barn has fallen down and the house has burned to the ground. There is viable income in the property. It's rented to a hunting cabin, it can be logged and there is a small quarry for decorative bluestone. There is also a significant amount of plowable land that could be rented out. My parents want us (me, my sister and brother) to decide what to do with it. None of us are farmers and only my brother still lives in the area. However, we'd like to keep it in the family at least, maybe build a cabin on it for vacations or rent it out to a farmer (if any of them still exist in NYS). I'd like to retire there and run it in the future. Just curious if anyone knows if we would incur significant estate taxes, inheritance taxes, etc when we do inherit it? Should they transfer ownership to us now instead of at their death to avoid any of this? Any ideas on what we could do with it until we can use it ourselves? Thanks.

Gone Fishing

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Re: Inheriting Farm Land
« Reply #1 on: January 23, 2015, 12:25:40 PM »
 There are several CPAs and lawyers on the forum, but you really need to consult with someone local who is familiar with your state.  Just guessing, I would think you would do better waiting for him to pass as gift limits are much lower than estate limits. There are almost certainly some different trust manuvers you could do now to facilitate the transfer.  If you really want to own it all someday, I would recommend going ahead and working out the details with your siblings and making it offical now, if you can afford it.  Land inherited by multiple parties can get messy quick.   

Consider the source but here is a little reading to get you started:

http://en.wikipedia.org/wiki/Estate_tax_in_the_United_States

If you decide to lease, talk with the county agriculture extension office for general rates and terms in your area.  Be aware that managing a property from afar can be a head ache.  A good local farmer that can keep an eye on things would be a great asset.

Leanthree

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Re: Inheriting Farm Land
« Reply #2 on: January 23, 2015, 01:00:27 PM »
Family Limited Partnership + annual gifting exclusion + lifetime estate basic exclusion .

Good loopholes in the tax code with the FLP being the most lucrative here assuming the value of 150 acres is what I think it is.