Business and Financial

A couple of years ago, we published a series of posts addressing Long-Term Care (LTC) issues affecting farm families. Although there haven't been major legal changes in LTC, the costs have risen steadily, and eligibility requirements have adjusted to account for these higher expenses. We thought it would be a good time to do an update on LTC costs.

The table below illustrates the changes in LTC service costs between 2021 and 2023. In Ohio, home health care experienced the most significant percentage increase, now surpassing $75,000 per year, while nursing home costs have risen above $100,000 annually. It's likely that LTC costs will continue to climb in the foreseeable future.

^{*2023 Genworth Cost of Care Survey}

Another important number is the Medicaid asset exemption limit.  This is the amount of wealth that a person or married couple may own and be eligible for Medicaid. For Ohio, this exemption amount increased slightly as provided in the table below:

As these numbers indicate, to be eligible for Medicaid, an unmarried person can own almost no assets, and a married couple may own only a modest amount of assets.  For anyone not eligible for Medicaid, LTC costs must be paid out-of-pocket until enough assets have been spent down to qualify for Medicaid.  Due to the low Medicaid exemption amount, very few farmers will initially qualify for Medicaid without aggressive prior planning or spending down almost all their assets.

How can farming operations address the potential threat of Long-Term Care (LTC) costs? Unfortunately, for most farmers, there are no simple solutions. Covering LTC expenses out-of-pocket can strain the farm's finances, while qualifying for Medicaid may not be feasible for many producers. However, there are several strategies that can help mitigate LTC risks:

1. LTC Insurance: Long-Term Care insurance policies can cover some or all nursing home costs. Although these policies can be expensive, and not everyone may qualify, it's worth exploring whether a LTC policy is a viable option.
2. Gifting: Assets that are gifted more than five years before needing LTC services are exempt from being used to cover LTC costs. However, gifting means losing control over the asset and missing out on a stepped-up tax basis at death.
3. Irrevocable Trusts: Transferring assets to an irrevocable trust can protect them from LTC costs after the five-year lookback period. While this approach offers more control over the assets than outright gifting, irrevocable trusts can be costly and require ongoing trustee management.
4. Self-Insure: Some individuals choose to build up savings or other assets to cover LTC expenses. This strategy avoids complex planning and legal fees but ties up capital that could otherwise be used to expand the business.
5. Wait and See: Some farm families prefer to wait and assess whether LTC costs will become a reality. They may then gift assets to protect them while retaining enough resources to manage through the five-year lookback period. This approach offers flexibility but risks five years of LTC costs.

Before choosing a strategy, it's crucial to assess the actual risk of LTC costs to the farming operation. Some may have sufficient retirement income to cover LTC expenses, negating the need for extensive planning. For others, LTC costs could threaten the farm and its land, necessitating aggressive planning. Consulting with an attorney or advisor experienced in LTC planning can help determine the best course of action for you and your farm.

The Court of Appeals for the Fifth Circuit has given us another holiday surprise! The nationwide injunction on the Corporate Transparency Act (“CTA”) and its beneficial ownership information (“BOI”) reporting requirements is once again in effect. 

On December 23, 2024, we reported that the Court of Appeals for the Fifth Circuit had lifted a nationwide injunction on the CTA and its BOI reporting requirements. Consequently, all reporting obligations were reinstated for businesses nationwide. Following the Fifth Circuit’s decision to stay the injunction, the Department of Treasury’s Financial Crimes Enforcement Network (“FinCEN”) extended the filing deadline for most reporting companies to January 13, 2025. We knew at the time that this would not be the last we would hear of the CTA and BOI reporting requirements, but what we did not know was how quickly another update would occur. 

On December 26th, just days after lifting the nationwide injunction, the Fifth Circuit issued another order vacating its stay, effectively reinstating the nationwide injunction and halting the BOI reporting requirements under the CTA once more. The court ruled that the order from the motions-panel granting the stay on the injunction be vacated “in order to preserve the constitutional status quo while the merits panel considers the parties’ weighty substantive arguments. . .”

How did the Fifth Circuit manage to both lift and later reinstate the nationwide injunction? The explanation lies in the distinct panels of judges that handle motions and appeals. One panel, the "motions-panel," reviewed the Government's "emergency motion for a stay pending appeal," while a different panel, the "merits panel," is evaluating the case based on its merits. These two panels reached differing conclusions regarding the federal district court's issuance of the preliminary injunction. The following timeline summarizes the events that have brought us to the current situation: 

• On December 3rd, a federal district court found the CTA likely to be unconstitutional and imposed a nationwide preliminary injunction on the CTA and its BOI reporting requirements.
• The Government appealed the decision, and a motions-panel of the Fifth Circuit considered the Government's "emergency motion for a stay [of the preliminary injunction] pending appeal." On December 23rd, the panel sided with the Government, lifting the injunction based on the likelihood that the Government would succeed in proving the CTA's constitutionality. The panel did not address the merits of the case but solely ruled on whether the district court's injunction should remain in place.
• The appeal is now before the merits panel of the Fifth Circuit which gave us our latest update and vacated the motions-panel’s order granting the Government’s motion to stay the district court’s preliminary injunction. Thus, the merits panel reinstated the December 3rd injunction. 

What now? 

The case is currently before the merits panel of Court of Appeals for the Fifth Circuit and has been expedited to the next available oral argument panel. We may receive another update on the status of BOI reporting and the CTA in just a few short days. While the Fifth Circuit continues to review the case, there are other federal courts considering challenges to the CTA. This case, and potentially other CTA cases, can still be brought before the Supreme Court of the United States for a final determination. 

However, as it stands, all BOI reporting requirements of the CTA have been suspended. While there is currently no obligation to meet the extended BOI reporting deadline, business owners can still voluntarily file their BOI reports with FinCEN. We will do our best to keep you up to date on any developments on BOI reporting and the CTA. 

If you and your family are grappling with the critical issue of how to transition the farm operation and farm assets to the next generation, OSU Extension is here to help.  Attend one of our “Planning for the Future of Your Farm” workshops this winter to learn about the communication and legal strategies that provide solutions for dealing with farm transition needs and decision making.  We’ve scheduled both a webinar version and several in-person options for the workshop.

This workshop challenges farm families to actively plan for the future of the farm business.  Learn how to have crucial conversations about the future of your farm and gain a better understanding of the strategies and tools that can help you transfer your farm’s ownership, management, and assets to the next generation. We encourage parents, children, and grandchildren to attend together to develop a plan for the future of the family and farm.

Teaching faculty for the workshop are David Marrison, OSU Extension Farm Management Field Specialist, and Robert Moore, Attorney with the OSU Agricultural & Resource Law Program. Topics which will be covered in the workshop include:

• Developing goals for estate and transition planning
• Planning for the transition of control
• Planning for the unexpected
• Communication and conflict management during farm transfer
• Federal estate tax challenges
• Tools for transferring assets
• Tools for avoiding probate
• The role of wills and trusts
• Using LLCs
• Strategies for on-farm and off-farm heirs
• Strategies for protecting the farmland
• Developing your team
• Getting your affairs in order
• Selecting an attorney

Webinar version.  You and your family members can attend the workshop individually from the comfort of your homes.  The four-part webinar series will be February 3, 10, 17, and 24, 2025 from 6:30 to 8:00 p.m. via Zoom. Pre-registration is required so that a packet of program materials can be mailed in advance to participating families. Electronic copies of the course materials will also be available to all participants. The registration fee is $99 per farm family.  Register by January 22, 2025 in order to receive course materials in time. Click here to register or go.osu.edu/successionregistration

In-person workshops.  Our local Extension Educators are hosting in-person workshops at five regional locations across Ohio during the upcoming winter.  Registration costs vary by. The in-person workshops will be held on

• January 23, 2025- Putnam County (9:00 to 4:00 p.m.)
• February 6, 2025- Pickaway County (10:00 to 4:00 p.m.)
• February 18, 2025- Clark County (9:00 to 4:00 p.m.)
• March 11 & 13, 2025- Wayne County (6:00 to 9:00 p.m.)
• March 13 & 18, 2025 – Licking County (6:00 to 9:00 p.m.)

Registration is required.  Find registration information for all workshops at go.osu.edu/farmsuccession

Thank you! OSU Extension would like to thank Ohio Corn and Wheat for their generous sponsorship of these programs.

We hope you’ll join us to move forward on planning for the future of your farm! 

For questions about the workshop, please contact David Marrison at marrison.2@osu.edu or 740-722-6073.

If you are one of those farm businesses putting off the requirement to file “beneficial ownership information” (BOI) to the federal government under the new Corporate Transparency Act (CTA), you just received an early Christmas present from a federal court in Texas.  The U.S. District Court for the Eastern District of Texas has issued a nationwide preliminary injunction against the CTA, concluding that the law “appears likely unconstitutional.”  The court halted enforcement of the CTA and its regulations (the Reporting Rule) and stayed the January 1, 2025 deadline for BOI reporting. 

What is the CTA?

The CTA is a new federal law that requires certain businesses to report the identities of those with “beneficial ownership interests” in the business to the federal Department of Treasury’s Financial Crimes Enforcement Network.  The CTA’s first reporting deadline was set to be January 1, 2025.

The parties who brought the lawsuit

Six Plaintiffs filed the lawsuit against the United States -- a private individual, three businesses, the Libertarian Party of Mississippi, and the National Federation of Independent Business.  The parties claimed that the CTA and its regulations are unconstitutional on several grounds:  first, for violating State’s rights under the Ninth and Tenth Amendments; second, for violating the First Amendment by compelling speech and burdening rights of association, and third, for violating the Fourth Amendment by forcing disclosure of private information.

The court’s analysis

Stating that whether the CTA and its rules are absolutely unconstitutional “is a question for another day,” the court instead focused its opinion on its duty to determine whether the Plaintiffs satisfied the proof necessary for being awarded the “extraordinary relief” of an injunction.  Doing so required the court to examine the elements a plaintiff must prove to receive an injunction.  The court’s opinion consumes 79-pages, but here’s a snapshot of the court’s analysis of the required elements:

1. That the CTA and Reporting Rule substantially threaten the plaintiffs with irreparable harm.  The Plaintiffs presented two arguments that they would suffer irreparable harm by complying with the CTA reporting requirements.  First, Plaintiffs claimed they would have to expend resources, spend time and effort, and incur compliance costs and legal expenses. Second, they argued that their constitutional rights would also be irreparably harmed because the fear of noncompliance and criminal punishment would force them to reveal protected information. The court agreed that Plaintiffs would suffer irreparable harm in both the form of compliance costs and substantial threats to their constitutional rights.  In doing so, the court rejected the federal government’s argument that reporting costs would be minimal and “not a heavy lift.
2. A substantial likelihood of success on the merits of any of their challenges.  The lengthiest part of the court’s decision is its analysis of whether the Plaintiffs are likely to be successful in their argument that the CTA is unconstitutional.  Plaintiffs raised several constitutional challenges, but the court addressed only the Tenth Amendment claim that Congress exceeded its authority by passing the CTA.  The government first argued that the Constitution’s Commerce Clause authorized the CTA, but the court determine that the CTA appears to be a “substantial expansion of commerce power” because it neither regulates economic activity nor non-economic activity among the states, but instead “regulates reporting companies simply because they are registered entities and compels disclosure of information for a law enforcement purpose.” Likewise, the court rejected the government’s second argument, that the Constitution’s Necessary and Proper clause authorized it to enact the CTA as a necessary and proper extension of its power to regulate commerce and foreign affairs and to lay and collect taxes.  The court found “no constitutional solace” in any of the government’s arguments, however.  The Plaintiffs had a substantial likelihood of of proving their claim that the CTA exceeds Congress’ authority and violates the Tenth Amendment, the court concluded.
3. That the threatened harm outweighs any damage the injunction might have on the Government and that preliminary injunctive relief will not harm the public.  A final question the court deliberated is the “balancing of the equities,” or whether the threatened injury to Plaintiffs by not granting the injunction outweighs any potential harm to the government from issuing the injunction.  The court quickly concluded that because the Plaintiffs’ injuries are concrete and because it is in the best interest of the public to prevent a violation of a party’s constitutional right by allowing enforcement of the CTA, the balance of equities favors issuing an injunction.

The extent of the injunction

The court’s final deliberation was whether the injunction should apply nationwide or only to the Plaintiffs, and whether it should also prevent enforcement of the CTA’s Reporting Rule and put the January 1, 2025 compliance deadline on hold.  Given that the CTA applies nationwide to nearly 33 million businesses, the court held that the extent of the potential constitutional violations Plaintiffs alleged would be best served through a nationwide injunction of the CTA and its Reporting Rule.  Combined with a stay of the compliance date, the nationwide injunction will maintain the status quo and protect the parties from irreparable harm pending further review of the Plaintiffs’ claims.

What does the case mean for farm businesses?

Businesses who haven’t yet filed their BOI information with the Department of Treasury’s Financial Crimes Enforcement Network are not currently required to do so, and the Department of Treasury cannot enforce the law or issue penalties against businesses who do not report.  Note that the court case did not address or include any remedies for businesses that have already filed BOI information.  But the lawsuit is not over and there will be further legal proceedings on both the constitutional challenges and the issuance of the injunction (UPDATE: The federal government filed an appeal of the court's decision on December 5, 2024).  For now, businesses might want to consult with their legal counsel and be prepared to file if the injunction is lifted. If that occurs, there is likely to be advance notice or an extension of time granted for filers to come into compliance.

Expect to hear more from us in the future on the legal status of the CTA and its BOI reporting requirements. 

Read the case, Texas Top Cop Shop v. Garland, here.