Making A Bequest to the Alaska Farmland Trust
Planning for a bequest in your will to the Alaska Farmland Trust will have a lasting impact on the agricultural future of our state. Creating a provision in your will or revocable living trust allows for you to decide how your estate is distributed and, in some cases, reduce estate taxes.
Bequests can be laid out to either provide a significant gift or a specific program, or to endow annual support to keep our work going. A bequest can also be used to protect your land by describing the desire to have a conservation easement place on your property.
Note: When setting up an endowment, donors generally follow the “5% rule.” For example, if your annual gift is $250, an endowment of $5,000 will generate $250/year for Alaska Farmland Trust while still offsetting inflation.
Beyond using a bequest, your can also set up a charitable gift annuity or charitable remainder trust in your will that will set up your heirs with income and provide the Alaska Farmland Trust with support.
Note: Charitable gift annuities and charitable remainder trust’s can also be created at death. However in this instance, the donor only receives an estate tax deduction, forgoing any income tax deduction to the estate.
How will remainder interest gift impact my estate tax?
This really depends on who is designated as life tenants on the property.
IF the donors/life tenants are husband and wife or the donor is the only life tenant, then the remainder interest completely removes the property from their taxable estate.
IF the designated life tenant is a child or another person (other than a spouse) then this may create a taxable gift.
How do you know if this will be determined a taxable gift?
It really depends on a variety of different circumstances. Depending, the gift may or may not qualify for the annual gift tax exclusion. In some instances, if the life interest is given to a child or someone else, the value of that life interest it may use a portion of the donor’s lifetime tax credit. In this instance, it could result in increased estate taxes when the donor dies.
The Alaska Farmland Trust can help with a preliminary evaluation of the estate tax consequences BUT we encourage your to seek out legal, tax, and financial advice before proceeding.
How do I get started?
Get Started Today, Rest Easier Tomorrow
Now is the perfect time to get your affairs in order. Find an attorney that will work with you to prepare your will or revocable living trust. The Alaska Farmland Trust is happy to provide sample language for any specific, residuary, and remainder bequests. We can also review your draft documentation to make sure it aligns with our organizations ability to manage and take over your assets.
PLEASE NOTE: If your bequests involves a real estate transaction with the Alaska Farmland Trust, please meet with our staff while your will or trust is in preparation so that we can be involved in the planning process and fully understand your plans and intentions. We need to make sure that we can meet your plans. This is especially true if you intend bequeath a conservation easement as we need to make sure the property aligns with our policies and to make sure we understand fully the restrictions you’d like to have placed on your property. This also allows for us to draft the conservation easement prior to the will being completed so that it can be included within the will.
Find the Right Professionals To Work With
If you are putting a will together, we highly encourage you to seek the professional assistance of an attorney. Attorneys will be able to address potential complications, such as minor children who are beneficiaries or an instance where multiple family members may be owning the same parcel of property. Estate planning done right can lead to reduced taxes, avoid disputes further down the road, and help your family transition after you are gone.
What are the Tax Consequences of Making a Bequest?
How Making A Bequest Impacts Your Taxes
The 2012 Tax Relief Act meant that roughly 1-2% of Americans will see an estate tax. For instance, any individual dying in 2016 with an estate valued at $5.45 million ($10.9million for married couple) or less is not subject to the estate tax. The exception to this is if they made an a large gift to a family member while they were still alive. Any amount above this is subject to a tax rate up to 40%
No matter the size of your estate, you should work with a legal and financial advisers to get your estate in order and draft and estate plan. Establish a will or a living trust so that you have the piece of mind knowing your estate will pass to the people and organizations you intended.
How Can I Give Through A Bequest?
Setting Up Your Bequest
There are several ways you can set up your bequest. Each way is described below with some sample language provided. Please note that the information we provide should be used as a guide alone and that you should seek out your own financial and legal advisors before proceeding.
Specific Bequests
Specific requests are outright gifts of money, bonds, stocks, tangible personal property, or any other assets. Wording for specific bequests could look as follows:
More information coming soon.
If your bequest of land has agricultural conservation values please touch base with us before completing your will. This will ensure that our staff have a plan in place for the future conservation and disposition of property.
Specific Bequest of Conservation Easements
In many cases, landowners wish to bequest a conservation easement on their land upon their death. We do encourage this, but it is critical that you talk to us about your plans as placing a conservation easement upon your property requires time, money, and technical support to ensure that the property meets the IRS deductibility requirements. In addition, we need to make sure that sufficient funds are set aside to manage and enforce the easement. Because of this, the Alaska Farmland Trust needs to be made aware of the desire for a conservation easement and so that we can inform you about our stewardship endowment policy. At the end of the day, we want to make sure we can see your wishes through, which requires planning on our part.
Once, you’ve talk this through with our staff, the suggested wording for the bequests of a conservation restriction are as follows:
More information coming soon.
Residuary bequests
Residuary bequests allow for an individual to leave all or part of the balance of the estimated to a beneficiary AFTER all debts, burial costs, probate expenses, and specific bequests have been satisfied.
The suggested wording would be as follows:
More information coming soon.
Contingent Bequests
When you set up a contingent bequest, it allows for the disposition of an estate if one or more beneficiaries fail to survive the benefactor. Contingent bequests are often written alongside a residuary bequest or a specific request.
This is an example of the type of language you could use:
More information coming soon.
Revocable Living Trust
Beyond using a will, you may choose to set up your estate using a revocable living trust. Living trusts allow you to change it during your lifetime while keeping control of your assets.
Living trusts have ADVANTAGES over wills.
- Your trustee will be able to distribute your estate without expense or delay of probate, given that the trust has been adequately funded.
- If you have property, such as a farm, that requires management the trustee can act on your behalf to make the management decisions in the event that you are unable too, making it easier and less confusing to establish guardianship.
- Because living trusts can be modified, there may not be immediate tax benefits. This changes upon your death and your heirs may save taxes at your death.
This website is intended to be an educational guide only and should not be seen as legal, accounting or any other professional advice. Please consult with the professionals in the instance that you would like to make a bequest to the Alaska Farmland Trust.
The Alaska Farmland Trust envisions a future with thriving local food markets that will give Alaskans access to fresh, healthy food, and keep our farmers farming.