By Frank Giles
Make Estate Planning a Top Priority
Sometimes when writing this column, I will scan the internet looking for topics that could be relevant for this page. Doing just that for this month’s issue, I came across a headline that had eye-catching power.
It was a write-up from American Farm Bureau Federation Associate Economist Samantha Ayoub titled “Estate Tax Cliff Threatens Family Farms.” In the article, Ayoub describes the potential fallout from the expiration at the end of the year of many provisions of the 2017 Tax Cuts and Jobs Act (TCJA).
Without congressional action, on Jan. 1, 2026, the exemption on the estate tax will drop by 50% to $7.61 million. On the face of it, that figure seems pretty high. But when accounting for the assets of land, equipment and all the other infrastructure of a modern farm, that exemption can be hit pretty quickly. As Ayoub noted, that doesn’t mean those farmers are rolling around in cash, and many will struggle to pay the tax bill when a loved one dies.
The article noted: “The TCJA doubled the estate tax exemption from $5.5 million per individual to $11 million indexed for inflation. Property left to a spouse transfers without an estate tax, which can effectively double the estate tax exemption when a surviving spouse passes. That means that in 2025, the estate of any farmer or rancher with a net worth over $13.99 million, if owned by an individual owner, or $27.98 million if owned by a married couple, must file an estate tax return within nine months of their passing.”
Last year, the U.S. Department of Agriculture estimated that if the estate tax exemption reverts to its pre-TCJA level, nearly twice as many farms in every sales class would have to pay estate taxes.
What is an estate? Ayoub notes it is pretty much a family’s earthly belongings, but on average more than 80% of that value is tied up in the land. That means family farmers need a plan to free up cash to pay the tax bill after a loved one dies. If the exemption is lowered, that means more families will be dealing with this issue.
Ayoub provides stats on the increasing value of farmland across the country. In some areas, this is caused by competition for good ground. In other areas, it is being driven by urban development. Growers in places like Florida and other southeastern states can attest to that.
There’s a lot on the table in Washington when it comes to taxes. President Trump’s “big, beautiful bill” would extend the TJCA tax cuts and also introduce new cuts. But it’s a wild time in D.C., so who knows how all of this will shake out.
Ayoub notes in her article that this only reinforces the importance of estate planning on the farm: “Beyond the impact on individual families, farm succession is critical for ensuring future farm production we all rely on. The turnover of a farm or ranch from one generation to the next requires difficult conversations and extensive planning to set up the family for success. Farmers face uncertainty in many forms, like weather, markets and costs. Providing certainty to the estate tax going forward can lessen the burden of keeping the farm in the family while facing these day-to-day challenges during a difficult time.”
Visit is.gd/EstateTax to read her article.