30 NEBRASKA CATTLEMAN October 2024 important tool in limiting operational liability and can be used as a gifting mechanism to reduce value for federal estate tax planning. A critical tool in any business succession planning is a buy-sell agreement, which is a contract among equity owners that governs what happens upon the retirement, death, divorce, etc. of another owner. It also governs who can purchase an ownership interest, the conditions of purchase and how the purchase price will be determined and paid. E T G Under current law, a 40 percent federal estate tax applies if more than $13,610,000 (the “exemption amount”) of assets are passed by lifetime gift or upon death to a person other than a spouse or a charitable organization. Unless Congress takes action, this exemption amount will be reduced to around $7,000,000 for people who pass away or make gifts after 2025. Below are a few basic strategies that may help reduce your estate tax burden. G Currently, you can give up to $18,000 to any person in a calendar year and it will not count against your exemption amount. While gifts greater than $18,000 reduce your exemption amount, it can be advantageous to gift appreciating assets so the value of future appreciation is excluded from your estate. The trade-off is gifted assets do not receive a basis step-up. For instance, if a parent owns property with a basis of $10,000, upon a lifetime gift of the property to a child, the child will receive the parent’s $10,000 basis in the property. If the child sells the real estate, the child will recognize capital gains to if the sales price is higher than $10,000. Alternatively, if the child inherits the property from the parent, the child will receive a “steppedup basis” to the value of the property on the parent’s date of death. The tradeoffs of each approach should be carefully discussed with your advisors. M A E T P T In addition to the above options, there are many other strategies available to engage in federal estate and gift tax planning for high-net-worth estates, such as the use of irrevocable life insurance trusts (ILITs), intentionally defective grantor trusts (IDGTs) and other strategies, but such strategies are highly complex and case-specific and must be closely discussed with your professional advisors. I Each person’s estate plan should be tailored to meet their needs. The key to effective planning is to start the conversation early, involve the relevant parties and seek professional advice. ~NC~ Editor’s Note: This article is provided for general information purposes only and should not be construed as legal advice. Those requiring legal advice are encouraged to consult with their attorney. ESTATE AND SUCCESSION PLANNING CONTINUED FROM PAGE 28 RANCHOFFICE@SCOTTANGUSCATTLE.COM | WWW.SCOTTANGUSCATTLE.COM MARLIN SCOTT (308) 550-0202 KELLY SCOTT (308) 550-1726 ABBY ROPERS (308) 550-0850 A.J. ROPERS (308) 215-0172 SAM SCOTT (308) 550-1738 HOSTED BY: DVAUCTION.COM AUCTIONEER: MATT LOWERY (308) 750-6119 CALL OR EMAIL FOR A SALE BOOK! AT THE RANCH 20898 N 465 STREET, BELGRADE, NE 68623 Come see the new sale barn! SALE LOTS CAN BE VIEWED PRIOR TO THE SALE TIME ON SALE DAY OR BY APPOINTMENT. THERE WILL BE A HOT MEAL PROVIDED SALE DAY. 60+ SALE LOTS: VIRGIN HEIFERS, BRED HEIFERS, BRED COWS, ELITE EMBRYOS, COMMERCIAL BRED COWS AND HEIFERS, ANGUS AND SIMANGUS SALE HIGHLIGHTS SITZ PRIDE 200B PROGENY 10+ HERD CHANGING OPPORTUNITIES!
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