Estate and Transition Planning

Farm Office Team on Zoom Webinar
By: Jeffrey K. Lewis, Wednesday, July 14th, 2021

"Farm Office Live" returns this summer as an opportunity for you to get the latest outlook and updates on ag law, farm management, ag economics, farm business analysis, and other related issues.  Targeted to farmers and agri-business stakeholders, our specialists digest the latest news and issues and present it in an easy-to-understand format.

The live broadcast is presented monthly.  In months where two shows are scheduled, one will be held in the morning and one in the evening.  Each session is recorded and posted on the OSU Extension Farm Office YouTube channel for later viewing.

Current Schedule:

July 23, 2021 10:00 - 11:30 am  December 17, 2021 10:00 - 11:30 am 
August 27, 2021 10:00 - 11:30 am  January 19, 2022 7:00 - 8:30 pm 
September 23, 2021 10:00 - 11:30 am  January 21, 2022 10:00 - 11:30 am 
October 13, 2021 7:00 - 8:30 pm  Februrary 16, 2022 7:00 - 8:30 pm 
October 15, 2021 10:00 - 11:30 am  February 18, 2022 10:00 - 11:30 am 
November 17, 2021 7:00 - 8:30 pm  March 16, 2022 7:00 - 8:30 pm 
November 19, 2021 10:00 - 11:30 am  March 18, 2022  10:00 - 11:30 am 
December 15, 2021 7:00 - 8:30 pm  April 20, 2022 7:00 - 8:30 pm 

Topics we will discuss in upcoming webinars include:

  • Coronavirus Food Assitance Program (CFAP) 
  • Legislative Proposals and Accompanying Tax Provisions
  • Outlook on Crop Input Costs and Profit Margins 
  • Outlook on Cropland Values and Cash Rents 
  • Tax Issues That May Impact Farm Businesses 
  • Legal Trends
  • Legislative Updates
  • Farm Business Management and Analysis
  • Farm Succession & Estate Planning
 

To register or to view a previous "Farm Office Live," please visit https://go.osu.edu/farmofficelive. You will receive a reminder with your personal link to join each month. 

The Farm Office is a one-stop shop for navigating the legal and economic challenges of agricultural production. For more information visit https://farmoffice.osu.edu or contact Julie Strawser at strawser.35@osu.edu or call 614.292.2433

By: Peggy Kirk Hall, Friday, April 09th, 2021

You can count on tax law to generate interest in the agricultural community and that’s certainly the case with several tax bills recently introduced in Congress.  Within the last month, members of Congress proposed a flurry of tax proposals that could impact agriculture if enacted.  Of course, passing tax legislation is always difficult and subject to partisanship, and we expect that to be the case with these bills. 

Here’s a look at the tax proposals receiving the most attention.

Death Tax Repeal Act of 2021.  Sen. Thune (R-SD) and Rep. Smith (R-MO) are the primary sponsors of S. 617 and H.R. 1712, companion bills introduced March 9 that propose to repeal the federal estate tax, which the sponsors claim to be “the most unfair tax on the books.”  The Act would also repeal the generation-skipping tax and make modifications to the computation of the federal gift tax, beginning at 18% under $10,000 and incrementally increasing by an additional 2%.  Cosponsors of the Senate proposal includes 30 other Republicans, and the House bill has 137 cosponsors including one Democrat.  The bills were referred to committee but have yet to see any further action.

For the 99.5 Percent Act.  Introduced March 25 by Senators Sanders (D-VT), Gillibrand (D-NY), VanHollen (D-MD), Reed (D-RI) and Whitehouse (D-RI) to “tax the fortunes of the top 0.5% and reduce wealth inequality,” this bill would reduce the federal estate tax exemption from its current level of $11.7 million per individual.  Under the proposal, estates in excess of $3.5 million per individual and $7 million per couple would pay the estate tax, which would begin at 45% for estates between $3.5 and $10 million.  The tax would increase incrementally, reaching 65% for estates over 1 billion.  The proposal would also reduce the lifetime gift tax exemption from its current level of $11.7 million to $1 million but would not reduce the annual $15,000 per person per year gift tax exemption for cash gifts.  It would limit the exemption for gifts to trust at $20,000 per year.  Protections for farmland include allowing farmland value to be lowered by up to $3 million for estate tax purposes and increasing the maximum exclusion for conservation easements to $2 million.  The bill would also prohibit reduced valuation for assets held in a pass-through entity, affecting the 35% valuation discount that is typical for farmland LLCs.

Sensible Tax and Equity Promotion (STEP) Act.  A group of Democrats in the Senate introduced the STEP Act on March 29 in an effort to “close the stepped-up basis loophole by taxing unrealized capital gains when heirs inherit huge fortunes on which the original owner never paid income taxes.”  The proposal would tax the transfer of property that has a net gain either during lifetime or at death.  During lifetime, a completed transfer to a non-grantor trust or individual other than spouse would be subject to tax but the first $100,000 of cumulative gain would be exempt.  At death, the first $1 million of appreciated assets would pass without taxation.  Transfers to charity, spouses, charitable trusts, qualified disability trusts would be exempt, as would gains on residences up to $250,000 per individual or $500,000 for married couples.  Taxes on illiquid property such as farms and some farm assets could be paid in installments over a 15-year period, and any taxes paid under the Act would be deductible from the federal estate tax.  The bill would also require gains on non-grantor irrevocable trusts to be reported every 21 years.

Corporate Tax Dodging Prevention Act.  Another bill by Sen. Sanders (D-VT) would go after the corporate tax rate.  The bill would restore the top corporate tax rate to 35%, its level prior to the reduction to 21% by the Tax Cuts and Jobs Act of 2017.  It also includes a number of provisions to reduce the ability of corporations to avoid paying federal taxes by moving income and profits offshore.

We are likely to see several more tax proposals in Congress in the coming year and time will tell whether any of them will have traction.  Some may merely be bargaining chips among the many legislative agendas in Washington.  One thing is certain--tax bills will continue to generate interest in the agricultural world, so we’ll keep readers updated on these and future proposals.

 

NAL NALC

White barns with red roofs on cattle farm.
By: Jeffrey K. Lewis, Friday, January 22nd, 2021

Ohio State Extension will host a virtual three part "Planning for the Future of your Farm" webinar series. The webinar series will span over three Monday evenings from 6:30 to 8:30 p.m. starting on February 15, 2021 and concluding on March 1, 2021. This workshop is designed to help farm families learn strategies and tools to successfully create a succession and estate plan that helps transfer the farm's ownership, management, and assets to the next generation. 

Topics discussed during this series include: 

  • Developing Goals for Estate and Succession; 
  • Planning for the Transition of Control; 
  • Planning for the Unexpected; 
  • Communication and Conflict Management During Farm Transfer;
  • Legal Tools and Strategies;
  • Developing Your Team;
  • Getting Your Affairs in Order; and
  • Selecting an Attorney

This workshop will be taught by members of the OSU Farm Office Team featuring Peggy Hall & Jeffrey Lewis, Attorneys from the OSU Agricultural & Resource Law Program and David Marrison, Extension Educator for Coshocton County. 

Because the workshop is online, you can invite your parents, children, and/or grandchildren to join you as you develop a plan for the future of your family farm, regardless of where they live in Ohio or across the United States.

Pre-registration is required. One hard-copy of program materials will be mailed to participating farm families. Electronic copies of the program materials will also be available to all participants. The registration fee is $40 per farm family. The deadline to register for the webinar series is February 10, 2021. You can register online at the "Planning for the Future of Your Farm" webinar registration page.  

In Summary: 

What? 

A three part "Planning for the Future of Your Farm" webinar series. 

When? 

Monday, February 15, 2021 from 6:30 to 8:30 p.m. 
Monday, February 22, 2021 from 6:30 to 8:30 p.m. 
Monday, March 1, 2021 from 6:30 to 8:30 p.m. 

Cost? 

$40 per farm family. 
Registration deadline is February 10, 2021. 

You can find more information about the webinar series by visiting the "Planning for the Future of Your Farm" webinar registration page. If you have any questions or concerns, please contact David Marrison by phone at (740) 622-2265 or email at marrison.2@osu.edu

We look forward to seeing you there! 

Last Will and Testament
By: Jeffrey K. Lewis, Friday, January 08th, 2021

Do you have a will? Was your will executed formally? Do your parents have a will? Was their will executed in accordance with Ohio’s laws? What happens if your parent’s friend claims they are entitled to a portion of your parent’s estate because they have a handwritten note saying as much? Recently, the Ohio Supreme Court decided a case to help clarify Ohio’s laws regarding will execution.

In re Estate of Shaffer

Dr. Joseph Shaffer – a psychologist and part owner of successful sleep clinics – executed a formal will in 1967. Dr. Shaffer’s formal will instructed that if his wife were to pass away before him, his estate would pass through trust to his two sons. Dr. Shaffer’s wife, unfortunately, did pass away before him. On July 20, 2015, Dr. Shaffer also passed away. Dr. Shaffer’s formally executed will was admitted into probate in 2015. 

In January 2016, Juley Norman – a friend and caretaker of Dr. Shaffer – filed a creditor’s claim against Dr. Shaffer’s estate claiming that she was entitled to a portion of his estate because of the care and services she provided to Dr. Shaffer before the end of his life. Ms. Norman attached a copy of a handwritten 3x5 notecard signed by Dr. Shaffer in 2006.  No signatures other than Dr. Shaffer’s were present on the notecard, which read: 

Dec 22, 2006
My estate is not 
completely settled 
all of my sleep network
stock is to go to 
Terry Shaffer
Juley Norman for 
her care of me is to
receive 1/4 of my estate
Terry is to be the
executor. 
This is my will. 
[signed by Dr. Shaffer]

 

Zachary Norman, Juley’s son, filed an application asking the probate court to treat the notecard as a will and recognize his mother as a will beneficiary. At an evidentiary hearing to determine whether the notecard should be admitted as Shaffer’s will, Norman testified about her close relationship with Shaffer and the circumstances surrounding the notecard.  She stated that only she and her son witnessed Shaffer write and sign the notecard and that Shaffer directed her son to keep it in a safe place.  The probate court held, however, that there was not clear and convincing evidence that the notecard was intended to be Shaffer’s will.

Ohio's Sixth District Court of Appeals disagreed, overruling the probate court and allowing Juley to be added to the list of beneficiaries of Dr. Shaffer’s Estate.  Dr. Shaffer’s son sought the Ohio Supreme Court’s discretionary review of the matter after the appellate court’s reversal. 

In reaching its unanimous decision to reverse the court of appeals, the Ohio Supreme Court analyzed the relationships between three Ohio laws, as follows:

ORC § 2107.03 – Formal Will Making Requirements

Ohio law states that a document admitted to probate as a formal will must meet be:

  1. In writing; 
  2. Signed at the end by the testator (or in some circumstances someone else at the testator’s direction); and
  3. Attested to and subscribed to by two or more competent witnesses who saw the testator sign the will. 

The Ohio Supreme Court confirmed both lower courts’ decisions that Dr. Shaffer’s notecard cannot be considered a formal will. No witness signatures were present on the notecard and thus the only way to admit Dr. Shaffer’s will is through an exception in Ohio’s laws regarding will making formalities.  

ORC § 2107.24 – Exception to the Formal Will Making Requirements

R.C. § 2107.24 provides a narrow exception to the formalities required in R.C. § 2107.03 and recognizes a will even though no witness has signed the purported will. A probate court must hold a hearing to examine whether an advocate of the nonconforming document establishes by clear and convincing evidence that: 

  1. The decedent prepared the document or caused the document to be prepared; 
  2. The decedent signed the document and intended the document to constitute the decedent’s will; and 
  3. The decedent signed the document in the conscious presence of two or more witnesses. 

This statute is central to the issue between the Normans and the Shaffers. The Ohio Supreme Court found that under this law, the court’s role is to determine whether a document should be admitted to probate, not to determine the validity of the will’s contents. Therefore, the Ohio Supreme Court found that the probate court should have admitted the will into probate based on the above requirements. Even though the specific bequests contained within the will may be stricken once the will is admitted, the 2107.24 evidentiary hearing is not the proper mechanism to determine the validity of the contents of the will. 

However, the Ohio Supreme Court also analyzed Ohio’s “Voiding Statute” which eliminates any specific bequests to an interested witness to the will. 

ORC § 2107.15 the “Voiding Statute”

Ohio’s “voiding statute” states that if a devise or bequest is made to a person who is one of only two witnesses to a will, the devise or bequest is void automatically. The witness, however, will be able to testify to the execution of the will, as if the specific devise or bequest to that witness had not been made. 

Essentially, if a witness stands to take a portion of a testator’s estate under a will and if the validity of that will hinges on that witness acting as one of the two essential witnesses necessary to create a valid will, then that person’s interest under the will is void as a matter of law. This law does not control whether someone is competent to be a witness in order to establish a valid will, it only governs whether a devise or bequest in an already admitted will is valid. Therefore, this law comes into effect only after a will is determined to be valid and is admitted to probate. 

The Ohio Supreme Court found that the voiding statute applies to witnesses under both R.C. § 2107.03 and § 2107.24. The Court held that Juley Norman could not take ¼ of Dr. Shaffer’s estate because she is one of the two witnesses required to establish a valid will, and thus Dr. Shaffer’s devise to her is void. 

Conclusion 

Sadly, Dr. Shaffer is no longer with us to tell the Ohio Supreme Court what his wishes were. The only people who can testify to the validity of the notecard stand to gain something from that notecard being admitted to probate. Dr. Shaffer may have intended to provide Juley with 1/4 of his estate, but he did not take the legal steps necessary to ensure that Juley would be a beneficiary of the will.   Historically, others in Juley’s position have not been honest when it comes to claiming an interest in someone’s estate, which is why the law prohibits witnesses from also being beneficiaries of the will.

The Shaffer case illustrates why it is important to consult with an attorney to ensure that your wishes will be carried out as you intend and your estate plan is in order.  If you want to change your will, an attorney will ensure that the new provisions are in accordance with Ohio law.  Doing so can keep your family and friends out of court.

Useful links: The Ohio Supreme Court's slip opinion In re Estate of Shaffer

By: Peggy Kirk Hall, Monday, October 21st, 2019

Unfortunately, the death of a farmland owner can create conflict within a family.  Often,  transition planning by the deceased could have prevented the conflict.  Such is the case in a family disagreement that ended up before Ohio’s Third District Court of Appeals.  The case pitted two brothers against one another, fighting over ownership of the family farm.

When their mother passed away in 2006, the five Verhoff siblings decided to sell the family farm.  Two of the brothers wanted to purchase the farm, but one of them was also the executor of the estate.  The estate’s attorney advised the executor brother that he should not buy the land directly from the estate due to his fiduciary duties as executor.  The attorney recommended that the executor wait and purchase one-half of the farm from the other brother after it was transferred from the estate to the other brother. 

Following a series of discussions between the two brothers, the executor brother sent half of the farm’s purchase price to the other brother and issued the farm’s deed to the other brother.  Over the next eight years, the two brothers shared a joint checking account used to deposit rental income from the farmland and to pay for property taxes and utilities on the property.  But when the executor brother asked the other brother for a deed showing the executor brother’s half-interest in the farm, the other brother claimed that the executor brother did not have an ownership interest.  The money rendered by the executor brother was a loan and not a purchase, claimed the other brother.  The other brother then began withholding the farm rental payments from the joint checking account. The relationship between the two brothers broke down, and in 2016, the executor brother filed a lawsuit to assert his half-ownership of the farm and his interest in the rental payments.

At trial, a jury found that the brothers had entered into a contract that gave the executor brother half ownership of the farm upon paying half of the purchase price to the other brother.  The trial court ordered the other brother to pay the executor brother half of the current value of the farm and half of the rental income that had been withheld from the executor brother.  The other brother appealed the trial court’s decision. The court of appeals did not agree with any of the other brother’s arguments, and upheld the trial court’s decision that a contract existed and had been violated by the other brother.   Two of the arguments on appeal raised by the other brother are most relevant:  that Ohio’s statute of frauds required that the contract be in writing and that the contract was illegal because an executor cannot purchase land from an estate. 

A contract for the sale of land should be in writing, but there are exceptions

Ohio’s “Statute of Frauds” provides that a contract or sale of land or an interest in land is not legally enforceable unless it is in writing and signed by the party to be charged.   The other brother argued that because there was no written agreement about the ownership of the farm, the situation did not comply with the Statute of Frauds and could not be enforceable.  However, the court focused on an important exception to the Statute of Frauds:  the doctrine of partial performance.  The doctrine removes a verbal contract from the writing requirement in the Statute of Frauds if there are unequivocal acts of performance by one party in reliance upon a verbal agreement and if failing to enforce the verbal agreement would result in fraud, injustice, or hardship to that party who had partly performed under the agreement. 

Based upon evidence produced by the executor brother, the appeals court agreed with the trial court in determining that an oral contract did exist between the two brothers and that the executor brother had performed unequivocal acts in furtherance of the verbal contract.   The court explained that the executor brother had endured “risks and responsibility” by giving the other brother money with the expectation that he would receive rental income from the farm and own a one-half interest in the property.  An injustice would occur if the verbal contract was not enforced because of the Statute of Frauds, as the other brother would receive a windfall at the executor brother’s expense, said the court.  The court concluded that because the doctrine of partial performance had been met, the writing requirement in the Statute of Frauds should be set aside.

Did the executor brother violate his fiduciary duties by purchasing the land?

The other brother also claimed that the verbal contract was illegal because the executor brother made a sale from the estate to himself.  According to the other brother, the sale violated Ohio Revised Code section 2109.44, which prohibits fiduciaries from buying from or selling to themselves or having any individual dealings with an estate unless authorized by the deceased or the heirs. 

The court pointed out, however, that the executor brother did not buy the farm from the estate.  Instead, the executor brother purchased the farm through a side agreement with the other brother who purchased the farm from the estate.  The court noted that this type of arrangement could be voidable if other heirs challenged it.  But since no other heirs did so, the court determined that the executor brother had not violated his fiduciary duties to the estate and allowed the side agreement to stand.

Estate and transition planning can help prevent family disputes

Imagine the toll this case took on the family.  It’s quite possible that parents can prevent these types of conflicts over what happens to the farm when they pass on.  An initial step for parents is to determine which heirs want to transition into owning and managing the farm, and what their future roles with the farm might be.  This often raises other tough questions parents must face:  how to provide an inheritance to children who don’t want the farm when other children do want the farm? Must or can the division of assets be equal among the heirs?  What about other considerations, such as children with special issues or not having heirs who do want to continue the farm?  These are difficult but important questions parents can answer in order to prevent conflict and irreparable harm to the family in the future.

The good news is that there are legal tools and solutions for these and the many other situations parents encounter when deciding what to do with the farm and their assets.   An attorney who works in transition planning for farmers will know those solutions and can tailor them to a family’s unique circumstances.  One agricultural attorney I know promises that there’s a legal solution for every farm family’s transition planning issues.   Working through the issues is difficult, but identifying tools and a detailed plan for the future can be satisfying.  And it will almost certainly prevent years of litigation.

The text of the opinion in Verhoff v. Verhoff, 2019-Ohio-3836 (3rd Dist.) is HERE.  For more information about farm estate and transition planning, be on the lookout for our soon-to-be released Farm Transition Matters law bulletin series or catch us at one of our Farm Transition Planning workshops this winter.

By: Evin Bachelor, Wednesday, June 19th, 2019

Have you ever sent an email or text message that seemed perfectly clear to you, but the recipient read it differently than you had intended?  It happens all the time in everyday life.  We know what we mean in our head, but the message we send contains ambiguities.  While we can hopefully fix ambiguities in an email or text message quickly, wills can present a different story. 

Once a person has passed away, fixing an ambiguity in a will is not easy because the best person to ask about intent cannot be called to testify.  Unfortunately, many families learn about the problems posed by ambiguities the hard way.

Take a recent example from Mahoning County.  In April, an Ohio appellate court upheld a probate court’s decision on how to distribute the assets of a Salem area farmer (“the farmer”).  This happened five years after the farmer passed away, and after two appeals of his estate.  He had a will, but it contained an ambiguity that resulted in years of litigation and delayed closure. 

His will made one specific bequest, and the rest of his property would go into a general pot for his named beneficiaries to divide among themselves as they or the executor saw fit.  The specific bequest read, “I give, devise, and bequeath to my brother […], the real estate at […] together with all contents of said real estate, if owned by me at the time of my death.”  The court had no problem with the real estate because the will provided an address; however, what did the will mean by “all contents of said real estate”?

At the time of the farmer’s death, the real estate contained a residence, family heirlooms, valuables, household goods, farm equipment, and vehicles.  The brother argued that the specific bequest included farm equipment and vehicles because of their physical presence on the real estate.  The general beneficiaries disagreed, believing that the bequest applied to pieces of personal property like heirlooms within the house.  Looking only at the will, the probate court agreed with the general beneficiaries.  The brother appealed the decision.

The appellate court viewed “all contents of said real estate” as ambiguous, and sent the case back to the probate court to re-examine the will.  The law generally disfavors testimony about what a decedent intended because the law assumes that the will provides the best evidence of what the decedent wanted.  When a court finds an ambiguity in a will, it may consider evidence beyond the will, such as testimony or other documents; however, the law considers this evidence less authoritative because it is not directly from the decedent.

After the first appeal, the brother and attorney who drafted the farmer’s will testified in probate court about conversations with the farmer before he passed away.  The brother claimed that conversations with his brother about ideas to grow the farm meant that the farm equipment should go to him; however, the attorney claimed that the farmer intended only for the brother to receive family heirlooms within the house.  The court believed the farmer’s attorney, and again decided that the specific bequest did not include the equipment.

For a second time, the brother appealed the probate court’s decision.  This time the appellate court was satisfied with the probate court’s actions and upheld the probate court’s interpretation of the will.  Click HERE to read the court’s opinion, which is cited as Bogar v. Baker, 2019-Ohio-1762 (7th Dist.).

It took the family in the Bogar case five years to have a legal determination of what their loved one meant in his will.  One clause resulted in lots of costly litigation, not to mention the stresses on the family.

No family wants a contentious probate.  Losing a loved one is hard enough without having to go to court to fully litigate the contents of a will.  Fortunately, this is a problem that can be avoided, or at least minimized, with an effective plan. 

Here are some tips to minimize ambiguities in your will:

  • Identify who you want to have specific pieces of your real and personal property.  For personal items such as family heirlooms, antiques, and art, you may leave a directive that names specifically which person receives what items.
  • Read through your will.  Does it make sense to you?  Does it sound like what you want to happen?
  • Consider showing your will to your executor and ask what he or she thinks your will says.  How would the executor carry out your will if you were gone today?  If he or she says something that you did not intend, you can still fix your will to more clearly align it with your wishes.
  • If you are concerned about beneficiaries challenging your will, you can include a no-contest clause that gives the executor final authority to interpret how to distribute your estate and penalize beneficiaries who challenge that distribution.  When included in a will, these clauses often prevent a beneficiary who challenges a will from receiving any property from the estate.

These tips do not guarantee a challenge-free probate process, but can help make your will as clear as possible.  If a question about your intent would still arise, having a couple of witnesses who can attest to your wishes will help the court get as close to your wishes as possible.  However, this requires you to tell each of these people the same thing and in a clear manner.  If you make any changes, you need to communicate that to your confidants.

Stay tuned in the next couple of months for new resources from our team about estate and business transition planning.  Until then, take a moment to review your estate plan!

By: Evin Bachelor, Monday, June 10th, 2019

The biennial budget remains the center of attention for members of the Ohio General Assembly, but some other bills have made progress since our last legislative update.  We will post a separate blog post about the biennial budget soon, but for now here is a review of other legislative activity at the statehouse. 

New legislation since our last legislative update

  • Senate Bill 159, titled “Grant tax credits to assist beginning farmers.”  This bill is essentially the same as House Bill 183, which seeks to provide tax incentives to beginning farmers along with those willing to help them build a farm operation.  Introducing the bill in the Senate while the House considers another bill allows the process to potentially go more quickly.  Instead of waiting on the House to complete all of its committee hearings and approve the bill, the Senate can start its own process.
  • House Bill 223, titled “Alter setback-wind farms of 5 or more megawatts.”  In 2014, the Ohio General Assembly modified the distance that wind turbines must be setback from an adjacent property line.  House Bill 223 would modify the setback law to base the setback on the distance from the nearest habitable residential structure on a neighboring property instead of the property line.  The setback requirement would affect future project certificates, as well as any amendments made to an existing certificate.  Click HERE for more information about the bill from the Ohio General Assembly’s website.

Legislation that we continue to follow

Here’s a status update on bills we covered HERE in March and HERE in April.  Access each bill’s webpage on the Ohio General Assembly website by clicking on the bill number in the following tables. 

 

Legislation passed by the Senate and currently under consideration in the House

Category

Bill No.

Bill Title

Status

Hemp

SB 57

Decriminalize hemp and license hemp cultivator

- Passed Senate

- Passed House Ag & Natural Resources committee

- Awaits vote of the full House of Representatives

Regulations

SB 1

Reduce number of regulatory restrictions

- Passed Senate

- Referred to House State & Local Government Committee

Business Law

SB 21

Allow corporation to become benefit corporation

- Passed Senate

- Referred to House Civil Justice Committee

 

Legislation going through the committee process, but not yet passed in either chamber

Category

Bill No.

Bill Title

Status

Watershed Planning

SB 2

Create state watershed planning structure

- Completed third hearing in Senate Ag & Natural Resources Committee

Tax

HB 183

Allow tax credits to assist beginning farmers

- Completed second hearing in House Ag & Rural Development Committee

Estate Planning

HB 209

Abolish estate by dower

- Completed third hearing in House Civil Justice Committee

Animals

HB 24

Revise humane society law

- Passed House Ag & Rural Development Committee

- Awaits vote of the full House of Representatives

Oil and Gas

HB 55

Require oil and gas royalty statements

- Completed first hearing in House Energy & Natural Resources Committee

Mineral Rights

HB 100

Revise requirements governing abandoned mineral rights

- Completed first hearing in House Energy & Natural Resources Committee

Energy

SB 119

Exempt Ohio from daylight savings time

- Completed first hearing in Senate General Government and Agency Review Committee

Local Gov’t

SB 114

Expand township authority-regulate noise in unincorporated areas

- Completed second hearing in Senate Local Government, Public Safety, & Veterans Affairs Committee

Property

HB 103

Change law relating to land installment contracts

- Completed second hearing in House Civil Justice Committee

Regulation of Alcohol

HB 160

Revise alcoholic ice cream law

- Completed third hearing in House State & Local Government Committee

Regulation of Alcohol

HB 179

Exempt small wineries from retail food establishment licensing

- Completed first hearing in House Health Committee

 

Legislation not on the move

These bills have not made much progress.  The biggest action taken on each so far has been referring the bill to a committee, but no committee has yet to hold a hearing on any of the bills.  Remember that we are in the middle of budget season, and only in the first six months of this legislative cycle, so the bills could still see activity later.

Category

Bill No.

Bill Title

Status

Animals

HB 124

Allow small livestock on residential property

- Referred to House Ag & Rural Development Committee

Animals

HB 33

Establish animal abuse reporting requirements

- Referred to House Criminal Justice Committee

Energy

HB 20

Prohibit homeowner associations placing limits on solar panels

- Referred to House State & Local Government Committee

Local Gov’t

HB 48

Create local government road improvement fund

- Referred to House Finance Committee

Local Gov’t

HB 54

Increase tax revenue allocated to the local government fund

- Referred to House Ways & Means Committee

Oil and Gas

HB 94

Ban taking oil or natural gas from bed of Lake Erie

- Referred to House Energy & Natural Resources Committee

Oil and Gas

HB 95

Revise oil and gas law about brine and well conversions

- Referred to House Energy & Natural Resources Committee

Regulation of Alcohol

HB 181

Promote use of Ohio agricultural goods in alcoholic beverages

- Referred to House Ag & Rural Development Committee

Tax

HB 109

Grant tax exemption for land used for commercial maple syruping

- Referred to House Ways & Means Committee

 

By: Evin Bachelor, Wednesday, March 27th, 2019

Sometimes you happen upon a question that you want an answer to, and the answer you find raises more questions.  That’s exactly what happened when we started examining Limited Liability Company (LLC) statutes from across the Midwest.

Originally, we wanted to determine whether there are any significant legal differences between the LLC statutes of different states.  While we may be based in Ohio, we find projects that examine how different states compare to one another on the same legal topic fascinating.  The comparisons allow us to see trends and different ideas, and we had the chance to do this in our recently completed projects on CAUV and agritourism.

Ultimately we found the Midwestern states to have functionally similar LLC statutes, with about half of the Midwest having adopted a uniform statute.  When a state adopts a uniform statute, it intends for its law on a given topic to match those of other states with the same uniform statute.  There are other examples of these like the Uniform Commercial Code, Uniform Probate Code, and more.  Uniform codes are designed to make it easier for people to do business and live their lives across state lines.  For Midwestern LLC statutes, even in states that have not adopted a uniform statute, the key elements are still very similar.  The statutes have filing procedures for creating the entity, default rules for operating agreements, and rules that govern LLCs in general.

When we answered our questions about the state statutes, we became curious about some of the benefits offered by using an LLC instead of some other business form.  We found that LLCs offer great liability protection, with some specific limitations such as the application of piercing the veil from corporate law.  Further, pass through taxation can provide great tax benefits and avoid double taxation.  Since states allow operating agreements to be highly customizable, LLCs also provide a flexible entity structure that may be adapted to suit the needs of a business or family.

That last word led us to another question: what benefits does the LLC structure offer a family farm in its estate and business transition plan?  The previous three benefits are well known and thoroughly discussed; however, this last one, while done a lot in practice, is not commonly mentioned in academic writing.  Ultimately, the benefits in estate and transition planning come from the flexible nature of the operating agreement.

How can LLCs be helpful in an estate and business transition plan for a farm?  Here’s a few ways:

  • Restrict the transfer of an ownership interest through rights of first refusal and buy-out provisions
  • Restrict membership and voting power of non-family members
  • Transition equity ownership more easily than in a corporation
  • Transition the business in relative privacy

Once we learned about these benefits, the question arose of how common farming LLCs now are.  Using data from the USDA’s Census of Agriculture, we found that by 2012, there were almost as many farms organized as LLCs as there were farms organized as corporations, while the vast majority of farms remained owned outright by individuals with no formal legal entity.  We are waiting for the next Census of Agriculture to spot any trends, because 2012 was the first year that farms were asked to identify whether they were organized as LLCs.

Throughout the paper, we made some observations and predictions for what we expect to see in the future.  We are also history buffs, so of course there had to be a section on the origins of the LLC, and why Wyoming was the first state to adopt an LLC statute.  It is an interesting and dramatic history that we had not heard about before.

Our project examining farm LLCs is available on our OSU Extension Farm Office website HERE, as well as the National Agricultural Law Center’s website HERE.  This material is based upon work supported by the National Agricultural Library, Agricultural Research Service, U.S. Department of Agriculture.

By: Peggy Kirk Hall, Friday, January 06th, 2017

Many Ohioans choose to avoid the probate process by using a transfer on death designation. Since 2000, Ohio has permitted property owners to use transfer on death designations to transfer property upon the owner’s death. In 2009, Ohio law allowed property owners to make transfer on death designations with an affidavit instead of by designation on a deed. The new Ohio law forces the automatic termination of transfer on death affidavits for changes in marital status.

The new changes took effect on December 13, 2016 when the Governor signed Senate Bill 232 into law. Under Senate Bill 232, a transfer on death designation made either by a deed or by an affidavit to a spouse terminates upon a divorce, dissolution, or annulment.  The new law applies to new and pre-existing transfer on death designations.

Because the law applies to pre-existing transfer on death designations, it may be a good time for property owners to revisit their estate plans. Property owners should be aware of the effect of divorce, dissolution, or annulment on their transfer on death designations.

The Ohio Legislative Service Commission’s analysis of Senate Bill 232 is available here. More information on transfer on death designations is available from the Ohio State Bar Association here

Posted In: Estate and Transition Planning, Property
Tags:
Comments: 0

The Ohio legislature has approved a repeal of the Ohio estate tax, but the tax will remain in effect for another 18 months.  The new law removes the Ohio estate tax obligation for any person who dies on or after January 1, 2013.  Governor Kasich signed the provision into law on June 30, 2011 as part of the state's budget package.  The final version of the repeal differed from the language proposed earlier this year in H.B. 3, which proposed ending the estate tax as of January 1, 2011 (see our earlier post).

Pages

Subscribe to RSS - Estate and Transition Planning