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Strategic Succession Planning for Family Ag Businesses November 2, 2011 Hot Springs, Arkansas

Strategic Succession Planning for Family Ag Businesses November 2, 2011 Hot Springs, Arkansas. Succession Planning Issues What are the rules? Current & anticipated cash flow Desire for control Charitable Objectives. Succession Planning Issues Family goals and relationships

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Strategic Succession Planning for Family Ag Businesses November 2, 2011 Hot Springs, Arkansas

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  1. Strategic Succession Planning for Family Ag Businesses November 2, 2011 Hot Springs, Arkansas

  2. Succession Planning Issues • What are the rules? • Current & anticipated cash flow • Desire for control • Charitable Objectives

  3. Succession Planning Issues • Family goals and relationships • Training/mentoring the next generation • The need to protect assets from creditors • Income and transfer taxes

  4. Goals & Objectives • Structuring intra-family transfers of assets to minimize estate and gift tax • Advising on life insurance needs and evaluation of life insurance policies

  5. Estate Planning Take Aim At Your Estate Plan

  6. According to the USDA, if an existing farm or ranch family has not adequately planned for succession, “it is more likely to go out of business, be absorbed into ever-larger farming neighbors, or be converted to non-farm uses.” In such situations, the impact on rural communities, the environment, our food supply and the national economy can be significant.

  7. Where Things Currently Stand • The 2010 Tax Relief Act • Overview: • Reduction in Estate/Gift/GST Taxes for 2011 & 2012 • Preserves 2010 Estate Tax Repeal • $5 Million Exemption • 35% Top Rate • Unused Exemption Portability • Future Still Uncertain

  8. Tools to Maximize the Current Transfer Opportunities • Grantor Retained Annuity Trusts (GRATs) • Family Limited Partnerships (FLPs) • Intentionally Defective Grantor Trusts (IDGTs)

  9. Other Tools That Remain Important • Charitable Remainder Trusts (CRTs) • Irrevocable Life Insurance Trust (ILIT)

  10. What Estate Tax Law Changes Can You Expect? • Post 2010 Tax Relief Act – December 31, 2012 • Estate Tax Laws Set to Revert to 2002 Levels • $1 Million Exemption • 55% Top Tax Rate

  11. Estate Taxes:Pre-December 17, 2010 Tax Act Post 2010 Tax Relief Act – December 31, 2012

  12. Estate Taxes:Post-December 17, 2010 Tax Act

  13. Gift Taxes:Pre-December 17, 2010 Tax Act

  14. Gift Taxes:Post-December 17, 2010 Tax Act

  15. Gift Taxes: Annual Exclusion

  16. Thank You Rob Gunther, CPA Frost, PLLC rgunther@frostpllc.com (800) 766-9241 Direct: (501) 975-0112

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