Denver, CO (PRWEB) January 24, 2013
The Grand Junction Daily Sentinel recently turned to Denver estate planning attorney James A. Littlepage for important insight into a possible change to the federal estate tax—specifically about how the change could affect the owners of family farms. Before Jan. 1, the plan was to dramatically reduce the estate tax exemption from $5 million to $1 million, which could have left a greater number of family members of deceased farmers in financial distress. While the exemption reduction ultimately did not go into effect, Attorney Littlepage’s explanation provided a valuable illustration of what type of harm the change could have caused if it had passed. He also provided commentary on another estate planning issue in a recent article by the Denver Business Journal.
The Dec. 27 Grand Junction Daily Sentinel article was titled “Farmers keep close eye on expiring estate tax.” According to the article, the change that was proposed would have made the tax applicable to those with land worth more than $1 million, instead of the already existing cutoff of $5 million. The article noted that this would have been particularly problematic for individuals running family farms, which are operations that tend to have an abundant amount of land but a much lower amount of cash available. Mr. Littlepage was quoted as saying: “Potentially it’s harmful to them, because they’re probably the most illiquid group of businesses around.”
According to Mr. Littlepage’s explanation cited in the news story, the estate tax applies once a farmer dies, if that farmer is susceptible to the tax. The taxes are due within nine months of the death. If the farm is left to a spouse, the tax issue can usually be largely avoided. The tax can, however, be fully applied if the farm is passed on to other relatives.
According to the Grand Junction Daily Sentinel’s reporting, there are more than 8,790 farms in the state of Colorado that value more than $1 million compared to just 1,194 farms that value more than $5 million, showing that thousands more farmers could have been affected. Furthermore, the maximum estate tax rate would have jumped from 35% to 55%. Despite these facts, Attorney Littlepage stated that there would still be hope for farmers and ranchers and their family members, even if the change went into effect. “It’s really a tax you can avoid, if you’re young enough and careful enough,” the lawyer was quoted as saying.
He said that one option was to set up a family limited partnership, which gives shares to a number of family members while the farmer is still alive. He referred to one family in Montrose that he had assisted—they were potentially going to have to pay about $6 million estate taxes, but he used multiple methods to help them get the tax amount to nearly nothing, according to the article. Ultimately, Congress chose to permanently keep the estate tax exemption at the same level it has been in recent years, according to Jan. 11 Forbes article on the topic. Also, the maximum estate tax rate only increased to 40%, instead of to 55%.
Attorney Littlepage was also recently in a Denver Business Journal article published in December that was titled “Children with special needs could see benefit from trusts.” In the article, Mr. Littlepage provided information that parents should know when trying to set up a trust for children with special needs, particularly when they are concerned about what will happen to their children after they themselves pass away.
Attorney Littlepage a highly-knowledgeable estate planning attorney who can assist client with various types of matters, whether the matter involves setting up a will, establishing a trust or applying for conservatorship of elderly family member. Individuals who want to learn more about the attorney’s estate planning services can call the James A. Littlepage Law Offices or visit http://www.denverestateplanningprobate.com.