Death Tax May Adversely Affect Landowners

When the federal estate tax was reduced in 2010, landowners rejoiced.  Yet, as changes to estate taxes lie ahead, there has been a shift from planning for tax minimization to planning for succession.  In some states, this failure to plan for tax minimization could result in the need to cut timber or sell parts of the family land. 

In Minnesota, for example, 44 percent of forestland is privately owned.  As land values increase over time, it is easy to see how a modest amount of forestland in an estate can trigger a state estate tax.  The resulting tax may exceed the liquid assets in the estate, requiring either a sale of timber before the forest has matured, or a partial property sale.   

In the past few months, a few states have made efforts to increase the exemption and expedite the phasing out of the state death tax.  Moreover, there are federal proposals to change both the death tax rate and exemption levels.  If the federal tax credit for state death taxes return, landowners in many states will have to plan for estate taxes. 

See Tamara Cushing, State Death Tax Changes May Hurt Family Landowners, Human Events, Jan. 6, 2015. 

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.