RIP: Rest in Paying off Your Taxes

Living is expensive, but so is dying.

(Whoa, getting dark in here.)

Truly, losing a loved one is a dark enough time… then the IRS comes knocking nine months later to ask for money from someone no longer with us.

*Pretends to not be home*

‘Til death and beyond do us part: The estate tax, aka, “death” tax, is one of many provisions of the 2017 Tax Cuts and Jobs Act set to expire Dec. 31 this year. If Congress doesn’t act on this, farm families could owe the IRS as much as 40% of their farm’s value after the death of a family member.

The more you owe: Currently, if a person’s estate is valued at $13.99M (per person) or $27.98M as a married couple and below, you wouldn’t incur any federal estate tax if you were to meet your maker. Once the exemptions expire, it’s expected to drop to approximately $6M per person after adjusting for inflation. Which means more farms would be subject to that “as much as 40%” tax rate. In the words of Randy Jackson, former American Idol judge, “that’s gonna be a no from me, dawg.”

Assets on the line: You may be thinking, “Hmm, I wish I had $6M!” Same, friend. But remember, farms aren’t exactly flush with cold-hard cash. Value is all tied up in machinery and land, and by golly, you can’t pay the IRS in soil. All of this comes as U.S. farms are closing and consolidating “at an alarming rate.” More than 160K shut their doors in recent years. Paying the estate tax can close even more.

Even generosity gets taxed: Even gifts are taxed. Wrap it up with a big ol’ Benjamin Bow. Annually, an individual can give up to $19K per person per year in money or property value, while a married couple can gift $38K. But when the Tax Cuts and Jobs Act expires, this provision will also be lowered to just $9,500 per person. Married couples, we’re available to receive $38K. Ya know, as a gift.

TL;DR: Estate planning for farms and ranches should be on your to-do list this year. Think: wills and trusts to avoid courts and probate.