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Farms, tax planning, and funding a family legacy


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​Given that there are more than 2 million farms in the United States, most advisors have at least one client who owns farm property. Although the number of farms has been dropping slowly but steadily since 2000, still, millions of dollars of wealth are tied up in farms as agricultural land continues to be valuable. 
 
Farmland, like many other hard-to-value assets, tends to carry with it a lot of emotional attachment. Farmland also can be hard to deal with in an estate plan because of the challenges of multiple owners and the complexity of the estate tax as it’s applied to farm-related assets. For these reasons, it is worth exploring philanthropic options with your clients who own farmland.​
Multiple ways to structure a gift  
A fund at the Peninsula Community Foundation can receive a tax-deductible gift of farmland in a variety of ways. An outright gift is always an option; lifetime gifts of farmland held for more than one year are deductible for income tax purposes at 100% of the fair market value of the property on the date of the gift, which also avoids capital gains tax and reduces the value of the client’s taxable estate. Other ways to give farmland include a bargain sale or a transfer to a charitable remainder trust which produces lifetime income for your client.
 
Keeping the family together 
A gift of farmland to a fund at the community foundation doesn’t just provide tax benefits. The gift also helps your client overcome the emotional challenges associated with letting go of an asset that in many cases has been in the family for generations.
 
By donating farmland to a fund at the Peninsula Community Foundation, a client can work with the foundation to extend the emotionally important, family-related dynamics that were previously linked to the land, even after the foundation sells the farmland and the client’s fund holds the proceeds. For example, multiple generations of family members can serve as advisors to the fund and collectively recommend grants to charities that carry on the values held by the family during the years it operated the farm, such as funding agricultural scholarships, promoting sustainable farming, or supporting programs that educate entrepreneurs about how to build a successful farming operation. 
 
A cautionary note  
Closely related to gifts of farmland to charity are conservation easements. Conservation easements can be a tax-effective way for a client to fulfill charitable intentions with real estate, but these vehicles must be carefully constructed to avoid landing on the IRS’s radar. 
 
We are happy to help you and your client structure a gift of farmland to a fund at the community foundation so that the client’s family members can continue to work together even after the farm is sold. Please reach out anytime!

For more information about establishing a fund, please contact Michael Monteith, Email/757.327.0862 ​​​​
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  • Homepage - Peninsula Community Foundation
  • About
    • Board of Directors
    • Connect
    • Financials
    • News
    • Partners
    • Impact >
      • Brink Impact Fund
      • Children's Holiday Fund
      • COVID 19
      • Give Local 757
      • Grants
      • Impact 100
      • Leadership Society
      • Legacy Society
      • PCF Initiatives >
        • Early Childhood
        • Homelessness
        • Neighborhoods
  • Scholarships
  • Funds
    • Agency
    • Corporate
    • Designated
    • Donor Advised
    • Employee Assistance
    • Legacy >
      • Types of Funds
    • Aug 2022 Advisor Newsletter
    • Sept 2022 Advisor Newsletter
    • Oct 2022 Advisor Newsletter
    • Nov 2022 Advisor Newsletter
    • Dec 2022 Advisor Newsletter
    • Jan 2023 Advisor Newsletter
    • FEB 2023 Advisor Newsletter
    • MAR 2023 Advisor Newsletter
    • APR 2023 Advisor Newsletter
    • MAY 2023 Advisor Newsletter
    • Sept 2022 Donor Newsletter >
      • KEEPING TRACK OF YOUR CHARITABLE DONATIONS IS MORE IMPORTANT THAN EVER
      • HERE’S WHAT TO KNOW BEFORE GIVING MONEY TO A NEW NONPROFIT
      • HOW TO GROW YOUR CHARITABLE GIVING BY BUNDLING TAX SAVINGS
    • Oct 2022 Donor Newsletter
    • Nov 2022 Donor Newsletter
    • Dec 2022 Donor Newsletter
    • Jan 2023 Donor Newsletter
    • Feb 2023 Donor Newsletter
    • Mar 2023 Donor Newsletter
    • Apr 2023 Donor Newsletter
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  • DONATE
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