Using Trusts Farmland Ownership Agriculture’s Future…Manage it Today National Farm Business...
-
Upload
louise-mason -
Category
Documents
-
view
217 -
download
0
Transcript of Using Trusts Farmland Ownership Agriculture’s Future…Manage it Today National Farm Business...
![Page 1: Using Trusts Farmland Ownership Agriculture’s Future…Manage it Today National Farm Business Management Conference Michael Duffy, Iowa State University.](https://reader030.fdocuments.net/reader030/viewer/2022032600/56649dc35503460f94ab5780/html5/thumbnails/1.jpg)
Using Trusts Farmland Ownership
Agriculture’s Future…Manage it Today
National Farm Business Management Conference
Michael Duffy, Iowa State University
Ed Cox, Drake University
Ag. Law Center
June 10, 2013
![Page 2: Using Trusts Farmland Ownership Agriculture’s Future…Manage it Today National Farm Business Management Conference Michael Duffy, Iowa State University.](https://reader030.fdocuments.net/reader030/viewer/2022032600/56649dc35503460f94ab5780/html5/thumbnails/2.jpg)
Outline• Acknowledgements• Objective of the study• Iowa trusts• Future work
![Page 3: Using Trusts Farmland Ownership Agriculture’s Future…Manage it Today National Farm Business Management Conference Michael Duffy, Iowa State University.](https://reader030.fdocuments.net/reader030/viewer/2022032600/56649dc35503460f94ab5780/html5/thumbnails/3.jpg)
Acknowledgements• Funding
– Leopold Center at ISU– College of Agriculture & Life Sciences at
ISU– Iowa Chapter of Am. Society of Farm
Managers and Rural Appraisers • Information & their time
– Iowa Trust Association– Iowa farmland owners
![Page 4: Using Trusts Farmland Ownership Agriculture’s Future…Manage it Today National Farm Business Management Conference Michael Duffy, Iowa State University.](https://reader030.fdocuments.net/reader030/viewer/2022032600/56649dc35503460f94ab5780/html5/thumbnails/4.jpg)
Objectives• To determine the extent and nature of
farmland ownership by trusts in Iowa• Determine the effects of public policy on the
expansion of ownership by trusts.• Determine the legal obligations of, and
remedies available for, trust parties in relation to the sustainability of trust assets and develop potential state policies that help ensure compliance with fiduciary duties relating to sustainable land management.
![Page 5: Using Trusts Farmland Ownership Agriculture’s Future…Manage it Today National Farm Business Management Conference Michael Duffy, Iowa State University.](https://reader030.fdocuments.net/reader030/viewer/2022032600/56649dc35503460f94ab5780/html5/thumbnails/5.jpg)
Methodology• Internet survey of members of Iowa Trust
Association; – 29 responses; unsure of exact
representation for the survey; 25 had trusts that included Iowa farmland;
• Added questions to the Iowa Farmland Ownership survey; every 5 year survey of Iowa farmland ownership by ISU; telephone survey using 40 acre tract as unit of sample; most answers are as a percent of farmland not people
![Page 6: Using Trusts Farmland Ownership Agriculture’s Future…Manage it Today National Farm Business Management Conference Michael Duffy, Iowa State University.](https://reader030.fdocuments.net/reader030/viewer/2022032600/56649dc35503460f94ab5780/html5/thumbnails/6.jpg)
Iowa Farmland Trusts
![Page 7: Using Trusts Farmland Ownership Agriculture’s Future…Manage it Today National Farm Business Management Conference Michael Duffy, Iowa State University.](https://reader030.fdocuments.net/reader030/viewer/2022032600/56649dc35503460f94ab5780/html5/thumbnails/7.jpg)
1982 1992 2002 2007 20120%
2%
4%
6%
8%
10%
12%
14%
16%
18%
Percent of Iowa Farmland in a Trust by Year
![Page 8: Using Trusts Farmland Ownership Agriculture’s Future…Manage it Today National Farm Business Management Conference Michael Duffy, Iowa State University.](https://reader030.fdocuments.net/reader030/viewer/2022032600/56649dc35503460f94ab5780/html5/thumbnails/8.jpg)
Provid
e ben
efits
for a ch
arity
Protec
ting asse
ts fro
m cred
itors
Protec
ting asse
ts with
spen
dthrift cla
uses
Avoidan
ce of c
apita
l gain
s tax
es
Preven
t child
ren fr
om sellin
g lan
d
Avoidan
ce of p
robate
Planning f
or dea
th or incap
acitati
on
Estate
tax i
mplications
Provid
e inco
me for s
urvivin
g spouse
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
Average Ranking for Reason People Place Farmland into a Trust, 1 Not Important to 5 Very Imporant
Trustee survey
![Page 9: Using Trusts Farmland Ownership Agriculture’s Future…Manage it Today National Farm Business Management Conference Michael Duffy, Iowa State University.](https://reader030.fdocuments.net/reader030/viewer/2022032600/56649dc35503460f94ab5780/html5/thumbnails/9.jpg)
Already in a trust May go into a trust0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
Distribution of Iowa Farmland by Use of Trusts, 2012
![Page 10: Using Trusts Farmland Ownership Agriculture’s Future…Manage it Today National Farm Business Management Conference Michael Duffy, Iowa State University.](https://reader030.fdocuments.net/reader030/viewer/2022032600/56649dc35503460f94ab5780/html5/thumbnails/10.jpg)
Revocable Irrevocable Other/DK0%
10%
20%
30%
40%
50%
60%
Distribution of Iowa Farmland in a Trust by Type of Trust, 2012
![Page 11: Using Trusts Farmland Ownership Agriculture’s Future…Manage it Today National Farm Business Management Conference Michael Duffy, Iowa State University.](https://reader030.fdocuments.net/reader030/viewer/2022032600/56649dc35503460f94ab5780/html5/thumbnails/11.jpg)
Become irrevocable Stay revocable DK0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
Distribution of Iowa Farmland in an Revocable Trust Based on Changes After Death of Establisher, 2012
![Page 12: Using Trusts Farmland Ownership Agriculture’s Future…Manage it Today National Farm Business Management Conference Michael Duffy, Iowa State University.](https://reader030.fdocuments.net/reader030/viewer/2022032600/56649dc35503460f94ab5780/html5/thumbnails/12.jpg)
Arizona California Illinois Iowa Missouri South Dakota Other0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Distribution of Iowa Farmland in a Trust Based on Where the Trust was Established, 2012
![Page 13: Using Trusts Farmland Ownership Agriculture’s Future…Manage it Today National Farm Business Management Conference Michael Duffy, Iowa State University.](https://reader030.fdocuments.net/reader030/viewer/2022032600/56649dc35503460f94ab5780/html5/thumbnails/13.jpg)
1 2 - 5 6 - 100%
10%
20%
30%
40%
50%
60%
70%
80%
Number of Owners/Beneficiaries for the Trust
Trustees Owners
![Page 14: Using Trusts Farmland Ownership Agriculture’s Future…Manage it Today National Farm Business Management Conference Michael Duffy, Iowa State University.](https://reader030.fdocuments.net/reader030/viewer/2022032600/56649dc35503460f94ab5780/html5/thumbnails/14.jpg)
Single Couple Two Three Four > 40%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
Percent of Farmland in Trusts by Number of Owners
Owner survey
![Page 15: Using Trusts Farmland Ownership Agriculture’s Future…Manage it Today National Farm Business Management Conference Michael Duffy, Iowa State University.](https://reader030.fdocuments.net/reader030/viewer/2022032600/56649dc35503460f94ab5780/html5/thumbnails/15.jpg)
Land in trusts All IA farmland0%
10%
20%
30%
40%
50%
60%
Distribution of Farmland by Gender and Trust Status
Male Female
![Page 16: Using Trusts Farmland Ownership Agriculture’s Future…Manage it Today National Farm Business Management Conference Michael Duffy, Iowa State University.](https://reader030.fdocuments.net/reader030/viewer/2022032600/56649dc35503460f94ab5780/html5/thumbnails/16.jpg)
< 50 50 - 60 60 - 70 70 - 80 > 800%
5%
10%
15%
20%
25%
30%
35%
40%
Distribution of Farmland in Trust by Age of Owner and Gender
Female Male Total
![Page 17: Using Trusts Farmland Ownership Agriculture’s Future…Manage it Today National Farm Business Management Conference Michael Duffy, Iowa State University.](https://reader030.fdocuments.net/reader030/viewer/2022032600/56649dc35503460f94ab5780/html5/thumbnails/17.jpg)
Women Men Total0%
10%
20%
30%
40%
50%
60%
70%
80%
Distribution of Farmland in Trust Based on Primary Reason for Owning the Land
Current income Long-term investment Sentimental
![Page 18: Using Trusts Farmland Ownership Agriculture’s Future…Manage it Today National Farm Business Management Conference Michael Duffy, Iowa State University.](https://reader030.fdocuments.net/reader030/viewer/2022032600/56649dc35503460f94ab5780/html5/thumbnails/18.jpg)
Land owner Family Member Attorney Bank Someone Else/DK0%
10%
20%
30%
40%
50%
60%
70%
Percentage of Iowa Farmland in a Trust Based on Who is the Trustee, 2012
![Page 19: Using Trusts Farmland Ownership Agriculture’s Future…Manage it Today National Farm Business Management Conference Michael Duffy, Iowa State University.](https://reader030.fdocuments.net/reader030/viewer/2022032600/56649dc35503460f94ab5780/html5/thumbnails/19.jpg)
Farming the Land Acting as the Farm Manager Delegating the Farm Management to Someone
Else
Don't Know0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
Distribution of Iowa Farmland in a Trust Based on Trustee’s Involvement Farmland Operation, 2012
![Page 20: Using Trusts Farmland Ownership Agriculture’s Future…Manage it Today National Farm Business Management Conference Michael Duffy, Iowa State University.](https://reader030.fdocuments.net/reader030/viewer/2022032600/56649dc35503460f94ab5780/html5/thumbnails/20.jpg)
Family Member Attorney Bank Someone Else Don't Know0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Percentage of Iowa Farmland in a Trust Based on Successor Trustee, 2012
![Page 21: Using Trusts Farmland Ownership Agriculture’s Future…Manage it Today National Farm Business Management Conference Michael Duffy, Iowa State University.](https://reader030.fdocuments.net/reader030/viewer/2022032600/56649dc35503460f94ab5780/html5/thumbnails/21.jpg)
Yes No Don't Know0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Distribution of Iowa Farmland in a Trust Based on Man-agement Specification Attributes of the Trust, 2012
Requires professional farm manager Specifies how to select who will manage farm
![Page 22: Using Trusts Farmland Ownership Agriculture’s Future…Manage it Today National Farm Business Management Conference Michael Duffy, Iowa State University.](https://reader030.fdocuments.net/reader030/viewer/2022032600/56649dc35503460f94ab5780/html5/thumbnails/22.jpg)
Surviving spouse's life Children's lives Multiple generations Set number of years
-10%
0%
10%
20%
30%
40%
50%
60%
Perecent of Trusts by Factor to Determine Life of Trust
Trustee survey
![Page 23: Using Trusts Farmland Ownership Agriculture’s Future…Manage it Today National Farm Business Management Conference Michael Duffy, Iowa State University.](https://reader030.fdocuments.net/reader030/viewer/2022032600/56649dc35503460f94ab5780/html5/thumbnails/23.jpg)
Lifetime of originator Lifetime of beneficiary Lifetime of a class of beneficiaries
More than a generation DK0%
5%
10%
15%
20%
25%
30%
35%
Length of Time for Farmland in Trusts
Owner survey
![Page 24: Using Trusts Farmland Ownership Agriculture’s Future…Manage it Today National Farm Business Management Conference Michael Duffy, Iowa State University.](https://reader030.fdocuments.net/reader030/viewer/2022032600/56649dc35503460f94ab5780/html5/thumbnails/24.jpg)
Yes No DK0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Trust Document Provides Provisions for Selecting Tenant
Trustees Owners
![Page 25: Using Trusts Farmland Ownership Agriculture’s Future…Manage it Today National Farm Business Management Conference Michael Duffy, Iowa State University.](https://reader030.fdocuments.net/reader030/viewer/2022032600/56649dc35503460f94ab5780/html5/thumbnails/25.jpg)
Related family member Know personally Young farmer getting started Be a good steward of the land0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
Average Importance of Characteristic in Selecting Tenant for Rented Farmland in a Trust, 1 least important to 5 most important
Owner survey
![Page 26: Using Trusts Farmland Ownership Agriculture’s Future…Manage it Today National Farm Business Management Conference Michael Duffy, Iowa State University.](https://reader030.fdocuments.net/reader030/viewer/2022032600/56649dc35503460f94ab5780/html5/thumbnails/26.jpg)
Cash rent Crop share Custom Owner operated Conservation programs0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Percent of Trusts by Type of Tenancy Arrangement
Trustees Owners
![Page 27: Using Trusts Farmland Ownership Agriculture’s Future…Manage it Today National Farm Business Management Conference Michael Duffy, Iowa State University.](https://reader030.fdocuments.net/reader030/viewer/2022032600/56649dc35503460f94ab5780/html5/thumbnails/27.jpg)
Yes No Occasionally0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Use of Professional Farm Manager
Trustees Owners
![Page 28: Using Trusts Farmland Ownership Agriculture’s Future…Manage it Today National Farm Business Management Conference Michael Duffy, Iowa State University.](https://reader030.fdocuments.net/reader030/viewer/2022032600/56649dc35503460f94ab5780/html5/thumbnails/28.jpg)
Farm
mag
azin
es
Trad
e pu
blica
tions
Gover
nmen
t pub
licat
ions
Inte
rnet
Tena
nts
Exte
nsio
n se
rvice
Expe
rienc
e0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
Trustee Average Rating for Use of Information Sources, 1 to 5 Scale
Trustee survey
![Page 29: Using Trusts Farmland Ownership Agriculture’s Future…Manage it Today National Farm Business Management Conference Michael Duffy, Iowa State University.](https://reader030.fdocuments.net/reader030/viewer/2022032600/56649dc35503460f94ab5780/html5/thumbnails/29.jpg)
Mail TV/Radio Newspaper Internet Face to face Other0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
Preferred Source of Information for Farmland Owners in a Trust
Owner survey
![Page 30: Using Trusts Farmland Ownership Agriculture’s Future…Manage it Today National Farm Business Management Conference Michael Duffy, Iowa State University.](https://reader030.fdocuments.net/reader030/viewer/2022032600/56649dc35503460f94ab5780/html5/thumbnails/30.jpg)
Yes No DK/RF0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Are There Provisions for Soil Conservation in the Trusts?
Trustees Owners
![Page 31: Using Trusts Farmland Ownership Agriculture’s Future…Manage it Today National Farm Business Management Conference Michael Duffy, Iowa State University.](https://reader030.fdocuments.net/reader030/viewer/2022032600/56649dc35503460f94ab5780/html5/thumbnails/31.jpg)
Yes No0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Should Soil Conservation or Sustainable Agriculture be Factors in Managing Farmland in a Trust?
Trustee Survey
![Page 32: Using Trusts Farmland Ownership Agriculture’s Future…Manage it Today National Farm Business Management Conference Michael Duffy, Iowa State University.](https://reader030.fdocuments.net/reader030/viewer/2022032600/56649dc35503460f94ab5780/html5/thumbnails/32.jpg)
More Likely to Sell ALL Farm-land
More Likely to Sell SOME Farm-land
Have No Effect on Selling Farmland
RF/DK0%
10%
20%
30%
40%
50%
60%
70%
80%
Distribution of Iowa Farmland Based on Impact of Greatly Reducing or Eliminating Capital Gains Tax, 2012
![Page 33: Using Trusts Farmland Ownership Agriculture’s Future…Manage it Today National Farm Business Management Conference Michael Duffy, Iowa State University.](https://reader030.fdocuments.net/reader030/viewer/2022032600/56649dc35503460f94ab5780/html5/thumbnails/33.jpg)
Lower Capital Gains Tax
High Selling Price Per Acre
Your Retirement from Farming
Something Else RF Don't Know0%
5%
10%
15%
20%
25%
30%
Distribution of Iowa Farmland Based on Factors Most Likely to Cause Sale of Some or All Farmland, 2012
![Page 34: Using Trusts Farmland Ownership Agriculture’s Future…Manage it Today National Farm Business Management Conference Michael Duffy, Iowa State University.](https://reader030.fdocuments.net/reader030/viewer/2022032600/56649dc35503460f94ab5780/html5/thumbnails/34.jpg)
Will to family Give to family Sell to family Sell to others Put in trust Other
-10%
0%
10%
20%
30%
40%
50%
60%
Distribution of Iowa Farmland by Anticipated Method for Distributing Farmland, 2012
1982 1992 2002 2007 2012
![Page 35: Using Trusts Farmland Ownership Agriculture’s Future…Manage it Today National Farm Business Management Conference Michael Duffy, Iowa State University.](https://reader030.fdocuments.net/reader030/viewer/2022032600/56649dc35503460f94ab5780/html5/thumbnails/35.jpg)
Pote
ntia
l tax
sav
ings
Help
keep
farm
land
in fa
mily
Limit
bene
ficia
ries'c
ontro
l ove
r ass
ets
Relie
ve b
urde
n on
oth
ers
Other
reas
on0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Distribution of Iowa Farmland that may go into a Trust Based on the Reason for Considering a Trust,
2012
![Page 36: Using Trusts Farmland Ownership Agriculture’s Future…Manage it Today National Farm Business Management Conference Michael Duffy, Iowa State University.](https://reader030.fdocuments.net/reader030/viewer/2022032600/56649dc35503460f94ab5780/html5/thumbnails/36.jpg)
Observations• Trustees tend to represent multiple
owner trusts whereas the majority of farmland reported to be in trusts was single owner or owned by a couple
• Tax avoidance and estate planning are strong reasons for using a trust but limiting children’s ability to sell or change is also noted
![Page 37: Using Trusts Farmland Ownership Agriculture’s Future…Manage it Today National Farm Business Management Conference Michael Duffy, Iowa State University.](https://reader030.fdocuments.net/reader030/viewer/2022032600/56649dc35503460f94ab5780/html5/thumbnails/37.jpg)
Observations• Most trusts were established in Iowa and
there are primarily elderly and female owners • Most trusts are set for one generation• The increasing use of trusts appears to be
slowing• For most landowners taxes are not the major
consideration in whether or not to keep their farmland
![Page 38: Using Trusts Farmland Ownership Agriculture’s Future…Manage it Today National Farm Business Management Conference Michael Duffy, Iowa State University.](https://reader030.fdocuments.net/reader030/viewer/2022032600/56649dc35503460f94ab5780/html5/thumbnails/38.jpg)
Observations• Conservation and sustainable
agriculture practices are almost totally absent from trusts
• Trustees believe this is a duty• This is an area for Extension and further
research as the use of trusts continues to grow