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Your Farm Your Legacy

Sentiments run deep when it comes to your farm, your roots. You’d like your life’s work to make an impact on others. You can make that difference by donating your family farm to the University of Arkansas Division of Agriculture. A well-planned charitable gift of your family farm to the Division of Agriculture may serve your needs in determining the future of your farm.

You may face one of these situations...

• No one in your family wishes to operate the family farm.
• Managing the farm is more than you care to accept now or in the future.
• You may need more income than the farm currently provides.

You have an interest in providing a lifetime income for yourself, your spouse, another family member or someone else.

A charitable gift of farmland can provide significant income tax benefits, in addition to solving difficult income, management and estate transfer problems.

At the same time, a charitable gift can support the critical work of the Division of Agriculture through its support of research, extension and teaching.

Income from your gift can support the division program of your choice – from your county 4-H to food safety research.

You designate the area that will benefit from your gift of the family farm. The University of Arkansas Division of Agriculture is committed to providing wise stewardship of your gift while respecting your wishes.

You can transfer your family farm in a number of ways to the Agricultural Development Council of the University of Arkansas Foundation. The following six methods offer great flexibility in planning:

1. Outright gift of your farm

An outright gift of land is often the best method for donors with other substantial assets. If you have held the land for more than 12 months, an outright gift receives very favorable tax treatment. You receive:

• An income tax charitable deduction for 100 percent of the appraised fair market value of your farm at the time of transfer.
• No capital gains taxation on appreciation.
• Reduction of your taxable estate through the elimination of estate taxes on the value of your farm.

2. Outright gift of your farm by will or living trust

In many cases, leaving your family farm to the Division through your will or living trust can be the most appropriate method for making such a gift. A fund established through your gift by will or living trust will be named for you or people of your choice, and income from the fund will be used in a manner you designate in a gift agreement between you and the Division. The benefits include a 100 percent charitable deduction for federal estate tax purposes. This method can significantly reduce or eliminate the erosion of your estate by taxes.

3. Gift of your farm with a retained life estate

Federal tax laws permit donating your family farm while retaining full use and responsibility for the farm during your lifetime, and the lifetime of your spouse or other beneficiary. You receive an immediate tax deduction at the time of your irrevocable gift as well as charitable estate tax deductions. Removing property from your estate can reduce the final settlement costs.

4. Gift of your farm to a charitable trust during your lifetime

You may wish to make a gift of land during your lifetime while also retaining your farm’s income. By giving your family farm to a charitable trust during your lifetime, you and your spouse can:

• Receive a guaranteed, diversified and productive source of income during your life and your survivor’s lifetime.
• Obtain an immediate income tax deduction.
• Avoid capital gains tax on the disposition of the family farm.
• Remove the asset from estate taxes.
• Be relieved of the family farm management.

5. Gift of your farm to a charitable trust by will or living trust

You can combine two methods, using your will or living trust, to create a
charitable remainder trust on your passing that will allow you to:

• Maintain management control of your farm during your lifetime.
• Relieve your surviving spouse or other beneficiary of the management responsibilities of owning land.
• Provide a more diversified and productive source of income for your surviving beneficiary.
• Minimize your estate taxes.
• Establish a significant memorial fund in the name of a loved one.

Established upon the death of the donor, the trust will make payments for the lifetime of the surviving beneficiary and benefit the Division of Agriculture program of your choice as established through a gift agreement.

6. Combined sale and charitable trust (Farmer Liquidity Trust)

By selling the portion of your family farm which contains your residence, using your tax exclusion to the extent possible (up to $250,000 per spouse) to shelter the proceeds, and selling perhaps one-third of the remainder of your farm for cash, while placing the other two-thirds of your farm in a charitable trust, you will:

• Receive substantial cash in-hand tax free.
• Receive an income for life from the charitable trust.
• Minimize your estate taxes.
• Establish a named fund to benefit the division program of your choice.

No decision involving your farm is easy, but if you believe any of these options are for you, we would be pleased to provide more information.

Your farm has been good to you, your community and your state. The University of Arkansas Division of Agriculture would like to help ensure that your farm will continue to be a blessing.

If you have questions or want more information, please contact Chuck Culver at (501) 575-2250 or cculver@comp.uark.edu, or Hugh Kincaid at (800) 317-7526. You may write to the Vice President for Agriculture, O-212 Tyson Center of Excellence for Poultry Science, Fayetteville, Arkansas 72701.