America’s Land Auctioneer
Captivate and celebrate the dynamics of rural America, American Agriculture and inspire and teach others how to live a bold and abundant life in rural America. Background: The intrigue, endless opportunities, and romance of rural life in America have never been more on the minds of Americans. The recent pandemic and civil unrest have Americans of all ages earning for a more peaceful, less hectic life. Even billionaire Bill Gates is now the largest crop landowner in America. As many Americans look for peaceful refuge in the rolling hills and wheat fields they are faced with a richness of opportunities. But where do you begin to look? This show will highlight and feature endless opportunities in every state. What is it that is so unique about rural America, the land and what it produces? How can I live that life? The American Land Auctioneer will tell stories and weave into those stories a place for you to dream, live and enjoy the abundance of all that rural America has to offer.
America’s Land Auctioneer
Safeguarding Your Agricultural Legacy: Expert Estate Planning Strategies for Farmland Owners
Unlock the secrets to safeguarding your agricultural legacy as we sit down with John Benson from Heartland Trust. With potential changes looming over estate tax laws, including the possible sunset of the Trump-era tax cuts in 2026, understanding the implications for estate exclusion amounts is crucial. Through this insightful discussion, we promise to guide you through the essentials of holistic estate planning, ensuring your assets are transferred seamlessly and your financial legacy remains intact.
John Benson shares his expert insights on effective estate planning tools specifically designed for farmland owners. We explore strategies such as the Spousal Lifetime Access Trust and the benefits of forming partnerships or limited liability partnerships. In addition, the significance of aligning with your existing team of professionals is highlighted to tailor personalized plans that reflect your family's unique needs and history. Our aim is to equip you with the knowledge to navigate the complexities of farm succession planning with confidence.
Clear communication and fair inheritance are pivotal in family legacy planning, especially within agricultural families. Our conversation touches on the importance of family meetings to discuss expectations, capabilities, and succession plans, minimizing potential disputes. By examining the role of trust documents and adaptable estate plans, we emphasize the importance of preserving your family's hard work for future generations. Join us as we unravel these vital strategies with real-life examples and expert advice, ensuring your family's legacy endures.
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Contact the team at Pifer's
Welcome to America's Land Auctioneer. I'm Steve Linkbroker for Pfeiffer's Auction Realty. We're glad you could join us today, don't forget. You can catch up on all our past episodes by visiting Pfeiffer's website, that's wwwpfeifferscom, and clicking on our podcast tab to access our podcast library on Apple and Spotify.
Speaker 2:All right, we have a special guest today, but before I introduce you, I also want to thank our sponsor of America's Land Auctioneer. That's Pifers Auction Realty and Pifers Land Management. Pifers team of land and equipment auctioneers, real estate agents and land managers will give you a free consultation on selling your land and equipment or managing your farmland. Nobody does it better than the team at Pfeiffer's when it comes to selling your land and equipment or managing your farmland. So our special guest today is John Benson with Heartland Trust, and you might be asking yourself why do we have somebody from Heartland Trust here? You're America's land auctioneer. You focus on land and equipment, but in reality, every landowner faces an enormous challenge on how to transfer your assets to the best way possible while protecting their financial future and legacy. So estate planning is not just for the wealthy right, john.
Speaker 3:No, it's not, and one of the things I got to give you and Piper's credit for is you look after your clients holistically, and so you're not just there for the transaction, for the sale of the farmland or the equipment, but you're also trying to help guide them as they transfer wealth from one generation to the other and avoid some of the pitfalls that we've all seen, so that we can be proactive for their benefit.
Speaker 2:Right, right. So okay, give us a little bit of background on Heartland Trust Company.
Speaker 3:Heartland Trust Company was founded about 35 years ago as North Dakota's first and only independent trust company, and so we are the similar to what you might find in any banking institution, without the credit cards, without the checkbooks. We just focus on the investment management. We focus on the trust aspect of our relationship, whether it be including farmland, which we have a number of our clients that have, or managing their assets into retirement and for the next generation.
Speaker 2:Well, you already caught my next one. I was going to ask you what separates you apart and for the next generation. Well, you already caught my next one. I was going to ask you what separates you apart. Well, the independent part is really eye-catching for me, because there are some wonderful banks and there are some wonderful companies in there, but you guys' focus is laser sharp on what you do and you guys do it really well. So what are some of the biggest estate planning concerns that farmland owners should be thinking about?
Speaker 3:Well, right now, what we've been kind of planning on for the last two years and again, this is legislative and there's not a crystal ball that knows what the future is going to hold but the Trump era tax cuts had an impact for estate planning where they basically or essentially doubled the estate tax amount, going from $5 million to $10 million almost 10 years ago.
Speaker 3:Right now, that valuation per individual to avoid having to pay roughly 40% estate tax is up to $14 million per person. For the last couple of years we've been concerned because that sunsets in 2026. So what that means is right now we can exclude roughly $14 million, but if it were to sunset and there was no legislative action, it would go back to roughly $5 million, inflation adjusted, or $7 million per person. So if you want to do the simple math, if today you could shelter $14 million per person or $28 million per couple, could shelter $14 million per person or $28 million per couple. If it were to sunset and no action was taken by the legislature, it would go back to $7 million per person, $14 million per couple. So with the land prices that you've been able to get at your auctions, the difference is from $28 million down to $14 million in that. One calendar year change now exposes you to 40% tax on $14 million.
Speaker 2:Wow, okay, you've unbundled a lot of things right there and we're going to repeat some of this. I'm going to make sure that John gives out his contact information so you can talk to him, because it is an individual plan for everybody and everybody's going to have a. Everybody's going to have their own twist on things, on that, but okay, so right now, we're, we're, we're following a set of rules. It's been in place for how many years did you say?
Speaker 2:We're coming up on 25 would be 10, 10 years 10 years of that and every year that, the, the, the exclusion that we've been, we're just talking about, goes up a little bit, right, correct? And so right around $14 million now per person and $28 million for a couple, if you set things up right. And that's at the federal level, right, correct? And now the states have their own estate planning. And how many states do you guys work in?
Speaker 3:Well, we work in a number of different states, but each state has its own. But if you talk about what we've got available here in the Fargo-Moorhead area on the North Dakota side, there is no state tax. They just follow the federal guidelines. When you get onto the Minnesota side, they've got their own tax that comes into play after $3 million. And so you're looking at about a 7% to 7.5% Minnesota tax on anything over and above that $3 million, in addition to what you've got at the federal level.
Speaker 2:Sure, okay, so that we're talking about estate taxes. What are some other things that are important to agricultural families for estate planning?
Speaker 3:Well, when we take a look at, there's a lot of people that believe that trusts are only for the ultra wealthy. You know, when you go back to those historic names like the Rockefellers and the Kennedys and the other individuals like that that were known for their wealth, trusts are now very commonly used by many, many different families for many different reasons. One of the most important things about a trust is that it allows you to avoid probate. It allows you to keep your information private, because an estate settlement that has to be probated is public knowledge. And third, a trust allows you to protect those assets from creditors. It allows you to protect those assets from mismanagement. It allows you to protect those assets and allow them to follow the family bloodline if there happens to be a divorce or infighting.
Speaker 2:There's a lot of benefits that you can find with having a trust to pass wealth on from one generation to the next so in those situations that you have already had that set up, what happens if somebody passes away and they don't have anything set up?
Speaker 3:if you don't have a will, the state has one for you. And that's where everybody kind of gets in line and says that Uncle Joe owed me something. Uncle Joe said that he would give me this and so, basically, what you're opening yourself up to is an extremely expensive public and challenging situation to settle your estate.
Speaker 2:Yep, wow, I've been with you at, at, at many seminars and many presentations that we do, and just recently, here we're in Bismarck and and and we're at the at the show there that that we we had some, some people there and and coming up. We're going to be in Florida and we are going to be in Arizona. Is that a good way? I know I already know I'm going to answer my own question, but is that a good way? I know I already know I'm gonna answer my own question but is that a good way to get the information out and is it a good way for people to come and and hear hear about estate planning and trust?
Speaker 3:Well, and just like what we experienced when we got a chance to spend some wonderful time with clients and friends out in Bismarck, knowledge and information is power, and so at that time, the most information that you can get specific to your unique situation, the better off you're going to be. But your seminars encapsulate what land prices are, what cash rents are going for, and what we do in conjunction is saying how do we utilize that information as well as the tools that are available for us legally to advocate and care for individuals and also their families?
Speaker 2:Yeah, it's a great dynamic when we are talking about land prices and how they've gone up so much recently, and you already teed into that earlier. But you know, and so not that long ago, there was not any estate tax ramifications that they were really facing. It was just their value, their assets were lower value, and so they just didn't meet these thresholds that kick in, and so it was fairly easy, I'm guessing. I mean nothing's easy, but I'm guessing it was a little bit more easy and seamless to figure out how to transfer your assets to the next generation. But now, yeah, they ramped up the values. Somebody owns four quarters in the Valley. That's $4 million or $5 million. I mean that's an impressive estate.
Speaker 3:Well, it really is. And the challenge with that, regardless of what the estate tax is, there's still significant benefit in having a trust. But what the amount or the valuation of the farmland is bringing into play, tax is a significant portion of passing that wealth on from one generation to the next. And there are things that we can do through partnerships, llcs, limited liability organizations that we can set up or structure with the help of our attorneys to help mitigate some of that risk, to be able to hopefully look at that estate and make that valuation as low as we possibly can, to mitigate that tax liability, all staying within the confines of the law.
Speaker 2:So if somebody wants to come to those seminars, or if they prefer to talk with you one-on-one, how do they set that up?
Speaker 3:Well and what we've experienced, just like we did in Bismarck. You know we're there to do that presentation. We spend our hour and a half talking about things at a very general level. But you and I both know we spent a lot of time after those meetings talking to people one-on-one who have questions specific to their farm. That one client that we had that's got farmland right now worth about $26 million.
Speaker 3:We're trying to sit down. What is the plan for them should something happen? At some point there's probably going to be a regression down from that $14 million, which is the highest it's ever been, except for one year when no legislation action could have been taken. That happened to be the year that George Steinbrenner passed away, but at that particular point the federal government's not going to allow that to happen anymore. But at this particular point, as we met with them, the situation is how do we care for his wife? How do we care for the next generation, of which only a portion of that is active in the farming? And what does that look like for them to know that they've got peace of mind, that there won't be infighting, that they will be able to retain as much of that hard-earned assets without having to pay taxes on it unnecessarily.
Speaker 2:So what I'm hearing is you'll meet with people one-on-one. These are great to gather, but you'll meet with them one-on-one.
Speaker 3:Anytime and anywhere.
Speaker 2:Awesome, awesome. Well, as we close out this first segment, again, I want to thank our sponsors, pfeiffer's Auction Realty and Pfeiffer's Land Management. Pfeiffer's team of land and equipment auctioneers, real estate agents and land managers will give you a free consultation on selling your land and equipment or managing your farmland. Nobody does it better than the team at Pfeiffer's. Stick around for our next segment and we're going to continue to talk about estate planning for farmland owners. We'll be right back after these messages, welcome back to America's Land. Auctioneer. I'm Steve Link, broker for Piper's Auction Realty.
Speaker 2:Join us today and don't forget to catch up on all our past episodes by visiting Piper's website, that's wwwpiperscom, and clicking on America's Land Auctioneer to access our podcast library on Apple or Spotify. And I want to thank our sponsors for America's Land Auctioneer. Piper's Auction Realty. Piper's Land Management. Piper's team of's Land Auctioneer. Pfeiffer's Auction and Realty. Pfeiffer's Land Management. Pfeiffer's Team of Land and Equipment Auctioneers, real Estate Agents and Land Managers.
Speaker 2:We'll give you a free consultation on selling your land and equipment or managing your farmland. Nobody does it better. All right, we've had some great discussion here with John Benson from Heartland Trust and we're going to continue that discussion and I want to remind people I know you're listening to this and if you would like to email myself or John, we'll get that information out with questions. Or if you want to meet up with us one-on-one, I always bring John in if I can. He's the expert on estate planning and strategies for farmland owners, which is who I am talking with on a day-to-day basis. So we talked about you mentioned some scenarios that are happening. So what are some of these common estate planning tools that these farmland owners are using?
Speaker 3:Well, and we talked about it earlier, there are ways that you can shelter assets to more effectively transfer that wealth from one generation to the other, and usually those involve, you know, getting an attorney, and we try and use, as much as we can, our client's team of professionals. So we're going to use their CPA, we're going to use their attorney to making sure that we're advocating for them to the best of their ability. But we're going to kind of take the lead on talking about what our options are and how we can implement them. And so, if there are things that we can do and one of the tools that a lot of our attorneys have been using is called a Spousal Lifetime Access Trust and it allows you to shelter right now up to $14 million and allow that growth to be outside of your estate and so at that particular point, if it's appropriate and working with the attorney, that's one of the tools that we can use. If it's appropriate and working with the attorney, that's one of the tools that we can use.
Speaker 3:One of the other things that you see when we take a look at farmland is partnerships, and so if you take a look at a limited liability, limited partnership, it's kind of an interesting dynamic in that you are an owner of this land with other individuals, and so if you were to go to market, how much would you get to expect to pay, relative to full market value, if you have to be in partnership with another individual and not have full control? So there are situations where it's appropriate to take a deduction on that asset that lowers your potential taxable estate. So there's many different tools that can be used, but you just have to figure out which is the most beneficial for you and also follows along with what your goals are and wishes for transferring that wealth from one generation to the next.
Speaker 2:Yeah, so yeah, you touched on a lot of things here. So if I'm from Lakota, north Dakota, washburn or some other town and I have a CPA or attorney, you welcome that.
Speaker 3:We welcome that as long as they've got the capacity and the expertise. So at that particular point we've done enough of these over our, you know, over my career that you can have that honest conversation and a majority of the professionals in our part of the world will tell you up front I'm not comfortable for doing that, or, yes, we can do that, let's do that together. But we're always trying to be engaging with that team of professionals that has a history, you know, with the family and with that asset, so that we have some continuity. And we also try and do that when we have an individual pass and so we have that. That was dad's trusted accountant, that was dad's, you know. Again, at that particular situation we want to have that continuity as long as we can.
Speaker 2:Yep, and then you mentioned, you know, triple LPs and the different entities. That's got to be a challenge too, because there's different ownership rules in the different states that they look at that anti-corporate laws that you know people ask me about. You know they're going to buy a farm and they want to put it in some limited partnership or LLC or something and then we have to talk about have that conversation if they can, if they're allowed to hold it that way and such. You'd probably dive into some of that, those questions.
Speaker 3:We get the questions but we also defer always to the attorneys. We're not attorneys, we're not CPAs, and so we're very cautious about the advice that we give. So at that particular point we're always using those professionals to say is this appropriate, is this right? And the attorneys are the ones that draft the documents. And so a trust company is the one that's kind of that trusted advisor or that individual that walks alongside with the family, provides some guardrails and provide some expertise.
Speaker 2:you know, as you transition the wealth from one generation to the next, Yep, so you have a family situation where one of the kids and it's so funny when I talk about kids it sounds like they should be young, or in diapers, or teenagers or something. Well, sometimes the kids are 67-year-olds that we're dealing with, and so when I say that term, it's like, okay, the next generation is maybe a better term for it. But when mom and dad are looking at transferring to the next generation and you have one or two of the next generation that are farming or part of the farm and other ones that do not have, how do you handle that?
Speaker 3:Well, and we went through this with the I'm farm succession certified and so I went through the North Dakota Ag Extension Office to walk through just those type of scenarios.
Speaker 3:Okay, and so each family's different, and so if you take a look at a scenario where you've got, you're first of all trying to figure out how many mouths and how many families can this farm feed, and so that's sometimes where we take a look at what does retirement look like for grandma and grandpa if you've got two or three generations still farming the same farm? Right, but when you sit down and take a look at it, the biggest challenge that we try and work with is fair and equal. What does that look like and what kind of tools can we use to help those farm families where you might have one or two siblings still actively farming and two others that have gone on to different professions? And what tools do we use, like life insurance, to do the fair and equal distribution? But one of the things that we also talked about very candidly is fair and equal is not always the same, and we look at that when we take a look at inheriting land. Crop land is much more valuable than pasture, so it's not the same amount of acreage.
Speaker 2:Which I could do a whole segment on how much pasture land has increased recently compared to crop land, which is fascinating. The cattle market is just on fire right now, and so producers are looking for that pasture and they're looking for things that can sustain good cattle stocking rates and have the good fence and the water, and so suddenly that has become more valuable, and which we're getting off topic. We're going to come back to this. But how often should they look at these plans that they've set up? Should they come back? If you come up with a plan but things kind of change, should you revisit it then? Or should you revisit it every six months, every three years? How often should you revisit a plan?
Speaker 3:When we sit down and we take a look at it. At the end of every year we're doing an annual meeting and so we're kind of talking about hypothetically, what are the valuations today. And we're seeing that anytime that we talk to you, you're giving us an idea of what things are doing throughout the state of North Dakota, throughout Minnesota, iowa, our clients down in Arizona, florida. We've got that information coming from you. What we really talk about is that every five years, you should be looking at your documents to making sure that they're current with what law changes have happened. But anytime that we have a triggering event, we've got a significant life change. We're reevaluating that document and modifying it because they are dynamic in nature. They change just like the stock market changes, just like valuations change every day. So we want to make sure that we have a plan in place that addresses those changes.
Speaker 3:But if we have a situation where and I'm just using a medical one that we just those changes. But if we have a situation where and I'm just using a medical one that we just went through where, unfortunately, we had a client who suffered a massive stroke, capacity is no longer there anymore, and so we want the family to be able to focus on taking care of dad and not having to worry about all of the other dynamics that are there, and so a trust company is significantly different than a brokerage. We can do all the same things, but with our higher fiduciary standard, we can step into the shoes and we can get that crop off the field. We can manage that. You know, at the elevator, we can step in and help out where others can't, and that's that's something that I love doing each and every day is how can we be there to care for you when you need us the most?
Speaker 2:All right, we're getting close to the end of the second segment here, but I want to revisit that fair and equitable.
Speaker 2:And boy, you hit some nails on the head there because you know you're all worried about oh, I want this and this. And then when something happens to mom and dad, all you care about is that they're going to be taken care of, and it can cause a lot of pain going forward if it's not set up right and they don't have understanding, and that's why I really appreciate professionals like you stepping in and helping people wade through those times. So, as we close out this second segment, I want to thank our sponsors Pfeiffer's Auction and Realty and Pfeiffer's Land Management. Pfeiffer's team of land and equipment auctioneers, real estate agents and land managers will give you a free consultation on selling your land and equipment or managing your farmland. Nobody does it better than the team at Pfeiffer's. Stick around for the third segment. We're going to talk about more of this fair and equal using life insurance and how often you should look at your plan. We'll be right back after these messages.
Speaker 2:Welcome back to America's Land Auctioneer. I'm Steve Link, broker for Piper's Auction Realty. We're glad you could join us today. Don't forget you can catch up on all our past episodes by visiting Piper's website at wwwpiperscom and clicking on America's Land Auctioneer to access our podcast library on Apple and Spotify. And I want to thank our sponsors, Pifers Auction Realty and Pifers Land Management. Pifers team of land and equipment auctioneers, real estate agents and land managers will give you a free consultation on selling your land and equipment and managing your farmland. Nobody does it better than the team at Pifers.
Speaker 2:All right, we've been visiting with John Benson from Heartland Trust and we've been talking about a lot of sensitive information, and one of the things we just talked about is fair and equitable, and I'm dealing with a family right now and Grandpa gave the two kids equal shares in this farm.
Speaker 2:One of the kids has since passed and so now we have another generation and the, the, the, the generation that that's still alive they gave a little bit of their shares and so now we have all these multiple shares on the same piece of land. Fortunately, there's one, two, three, four, four quarters involved, but there's different shares and it's really complicated. It's a math exercise that I'm doing, and I can imagine that grandpa wanted to preserve that farm and thought the best way to do it was to give equal shares to everybody. And now some of the third generation are farming, some are not, some are spread out all over the country, and so I find myself trying to help navigate through on how to maybe split that up Again, I use that term. It may not be equal, but hopefully it's fair for everybody and at the end result, if we can find a way to satisfy everybody, that's worth a lot.
Speaker 3:Very much. So I think the important thing in those situations is common ground and understanding realistically what the capabilities are of the farm. And so when we sit down and we hold these family meetings which we do and have a number of them we basically lay the cards face up on the table and we work our way backwards into what does that look like? And it's not just the farming generation, but it's that generation that might not be involved in the farming aspect that grandma and grandpa still want to take care of, and what does that look like. And so there's many situations where we're utilizing other tools or resources, whether it's cash on hand that might've been saved for a lifetime, whether it's life insurance, whether there are some other assets that are incorporated you know, homes in Arizona, homes in Florida we look at it holistically to try and find a common ground that would allow everybody to have peace of mind going forward.
Speaker 3:Unfortunately, the nature of money it makes people do unfortunate things, and so we have to deal with that every time that we settle in the state as we're walking through, everybody says it's not going to be my family, but unfortunately we have people calling us regularly because it is their family, something that they never thought would happen, and mom and dad or grandma and grandpa's goal was that Christmases would still be celebrated together for generations to come. And there are interesting family dynamics that we've all experienced. We've all heard the horror stories of somebody in our county, somebody in our town, where it went so unconscionably wrong. They spent five years in court, everybody with their own attorney, battling over the same land, and the outcome is so unfortunate. You have funerals that people aren't attending. You have family members not talking anymore. So the better the plan that's upfront, proactive, the much better the outcome's going to be. Yep.
Speaker 2:Would you suggest, when a plan is formulated, that mom and dad visit with the next generation to explain what that plan is?
Speaker 3:We see it on both sides. So what we see on the sides of some of those very active farm families together where they're already sitting at that kitchen table talking about what they're getting per bushel and how it's going to be trickling down within that entire family, we see those family meetings very positive because they're already aware of what's going on be trickling down within that entire family. We see those family meetings very positive because they're already aware of what's going on.
Speaker 3:There are some situations and a number of our farm families are this way where there is significant wealth and grandma and grandpa or mom and dad don't want the next generation to think that they've got a free ride. And so, if you take a look at some of the natural transitions, many third-year generations of small businesses don't make it. They fail because they didn't earn the money, they didn't work at the same way that grandma and grandpa or mom and dad might have. And so we're trying to figure out what kind of structure, what kind of trust, what kind of protections can we put in place to ensure that we don't have that lottery winning, or that we ensure that we've got the guidelines and the resources and the tools for that second, third, fourth generation to be able to lean on in order to perpetuate that legacy that was so important.
Speaker 2:So what are some of those? How do you do that? Is there time frames where they cannot sell certain assets? Can you set that up in your estate planning?
Speaker 3:There are ways to do that, and so it all depends on what's important to the grantors or what's important to grandma, grandpa, mom and dad.
Speaker 3:There are codicils and items that can be used within a trust document that limit or restrict what can happen to the farmland and what you want to see happening.
Speaker 3:Sure, so we'll sit down and have that conversation with mom and dad, grandma, grandpa, and talk about what are your wishes, what are your goals and, unfortunately, some of the situations that we see and I know you have too there are second or third generations that have never been out to the farm.
Speaker 3:Yep, you know, and there's not the same connection there, and that's a really hard conversation at the kitchen table for grandma and grandpa to say you know what, for the betterment of the family legacy, it's okay for this farmland to be sold when we pass, we know that it can be invested and have a return that's greater than what farmland had. If we realize that appreciation, and then we go through and we have the sale like what you're able to facilitate, maximize those dollars and provide for education, provide for health, education, maintenance and support for generations to come right. Or you can write in there and say we want the farmland to be held for this exponential period of time and then at that particular time because some states have laws of perpetuity and at that particular time it be sold and now you're talking about it being removed three, four, five generations. But it provided that fixed income, stable stream of income to all of the heirs for all those years.
Speaker 2:So what I'm hearing you say there too. So trust just don't end when, if it was set up for mom or dad and they pass away, it just doesn't end.
Speaker 3:So, like in North Dakota, you can have a trust that lasts 21 years past the last remaining beneficiary Wow, so you're talking about four or five generations potentially. You know that are in there that can be impacted through the legacy planning of a trust.
Speaker 2:And then if an estate is set up and let's say that Heartland's not involved, but the people that were put in place that say that it's me and I just don't have the talent and I want to turn an estate over to you, you guys do that.
Speaker 3:We do. I think you have the talent, but for most people who don't come in at that particular point.
Speaker 3:One of the challenges that we see is that dynamic of family trust, and we see it within our family.
Speaker 3:We see it within so many of somebody who has the knowledge and the power and siblings that don't, and there's always this fear that they're taking advantage or that they might be getting some additional benefit that they're not talking about.
Speaker 3:And so at that particular point, transparency is very important and that's why a lot of people choose a corporate trustee like Heartland is that we're transparent and accountable to all parties, not only grandma and grandpa, mom and dad, but to that next generation when appropriate. A corporate trustee like Heartland is that we're transparent and accountable to all parties, not only grandma and grandpa, mom and dad, but to that next generation when appropriate. And so we're providing every income, every expense, every activity for the entire year is all on that one balance sheet, and we have to be prepared to stand in front of a judge as a trustee and a fiduciary to answer why we did that for the sole benefit of our clients. There can be no ancillary benefit on our part where we're getting a trip, we're getting golf clubs, anything else like that. That's the fiduciary standard that a trust company is underneath, and so we just need to be prepared and say why did we make this decision, and is it in the benefit and the sole benefit of the heirs, whoever might be the grantor of that trust?
Speaker 2:And that's been something that took me a while to wrap my arms around. When you're managing a trust and Billy Bob over here, you know, always did X, y, z and things change and when things change and you have to look at it for the benefit of the trust and all of the heirs equally, if Billy Bob was taking advantage of that and getting something for free or no cost, it just has to change and you have to explain that in a way that it was a gift earlier, now it has to be part of the trust and now they have to do it.
Speaker 3:You're exactly correct, and we unfortunately see situations where we're court appointed.
Speaker 2:Yep.
Speaker 3:And we walk into scenarios where a cousin, some other you know relative or some other friend is taking advantage of grandma and grandpa taking advantage of grandma who wasn't aware, and their rents are 17 years old Right, you know, they are nowhere near what the current market value needs to be. That's where your advocacy comes in and helping us ensuring that we're getting fair market value, because at that particular point you're talking about not just the farming error, but the other errors are there that should be sharing in what has been earned over all those years Right. And so we sit down and go back and say what does that look like? How do we protect a vulnerable adult situation? Yep. What does it look like for us to be very transparent and honest with individuals saying you're nowhere near market value Yep. And so we have to walk that fine line, and that's usually determined by capacity.
Speaker 2:Yep.
Speaker 3:You know, grandma, grandpa, can do something special while they're alive, but we need to evaluate that when it comes to what does it look like for the next generation.
Speaker 3:So we're very proactive in our conversation with grandma and grandpa, saying this is what it will look like, because it doesn't just impact those two farming individuals or farming grandchildren, it impacts the family as a whole.
Speaker 3:And so that there aren't any surprises, we've covered all the bases. But many times when we bring that up and we well, I think you and I talked about this in Bismarck we had that situation where they were so focused on getting the farmland transferred into the one grandson's name, they completely forgot the other three grandchildren, and it was you could see a look of panic, you know, when we talked about that they had already kind of had their plan together before we met and all of a sudden I just, you know, just asked the question and they, we completely forgot. So what does it look like? How do we modify? How do we bring that into the base? We ended up using a lot of insurance at that particular point, but that was trying to figure out of going. How do we protect that family? How do we keep Christmases and Thanksgivings and families together, as well as the farming operation, if that's the legacy that they want to pass on.
Speaker 2:Well, great, I don't want to skip. There's a lot to unpackage there and we'll come back on the fourth segment here, the last segment, and unpackage that. But as we close out this third segment, I want to thank our sponsors, pfeiffer's Auction Realty and Pfeiffer's Land Management. Pfeiffer's team of land and equipment auctioneers, real estate agents and land managers will give you a free consultation on selling your land and equipment or managing your farmland. Nobody does it better than the team at Pfeiffer's. Stick with us for the last segment. We'll be back with John Benson here with Heartland Trust right after these messages right after these messages.
Speaker 2:Welcome back to America's Land Auctioneer. I'm Steve Link, broker for Piper's Auction Realty, and we're glad you could join us today for this fourth and final segment. Don't forget and catch up on all the past episodes by going to pyferscom. We want to thank our sponsors, pyfers Auction and Realty and Pyfers Land Management. Pyfers team of land and equipment auctioneers, real estate agents and land managers will give you a free consultation on selling your land and equipment or managing your farmland. Nobody does it better than a team at Pyfers.
Speaker 2:All right, so we're still here with John Benson and we have a lot to cover here in this last segment, because I can't keep you here all day. Right, you got other things to do, but if you didn't get enough of us here on the radio, you can join us in Naples, florida, on February 25th or in Gold Canyon, arizona, on February 28th. Mesa, march 1st that's a seminar, and then on March 2nd we'll be part of the North Dakota picnic down at Red Rock in Mesa as well too. So those listeners that want to see us in warmer weather, I might be wearing shorts. I don't know if you'll be wearing shorts, but you can see our white North Dakota legs and join us there and learn a lot at these seminars.
Speaker 2:It's really impressive what you can go through in an hour and you know you mentioned the show we did in Bismarck and that it's incredible, the stories that you can tell and how you can touch on people. So I'm going to have you repeat it again later. But give me your phone number now, john Benson. So at Heartland Trust Company, that's 701-235-2002, and my email is john j-o-n at heartland trustcom. All right, so if you didn't have a pen or pencil, uh, handy there you can, uh, you can listen a little bit later and we'll repeat those numbers again. So, all right. So we at last segment here we're talking a little bit about that story, about how they left some of the people off of their, their, their plans, and but did you help them out? Did you get it figured out? We were able to get them figured out.
Speaker 3:But again, that's why it's so important to have kind of that outside third party look at what your plan looks like, because it is very easy to get so focused on an outcome that you don't see the entire picture.
Speaker 3:And the other thing that we talk about and we've talked about this many times there is no cookie-cutter approach. Each family dynamic situation is different. Some people are worried about addiction, some people are worried about divorce, other people are worried about that. They don't have anybody coming up that's actively involved in farming, and what does that look like? Because you've got third or fourth generation farmland and so it's really important to meet people where they're at, have an honest and transparent conversation about all their wishes and goals, the challenges that they think they might face. We're going to kind of add to that from a standpoint of experience, just like what you do when you talk about you know how to hold your sales, what time of the year to hold your sales, how to maximize that value, how to leverage your network of people to get the best bang for the buck. We're going to sit down and have that in a kitchen table format and making sure that whatever we're doing is customized to that family's need.
Speaker 2:Yep, all right, we again. We're short on time today, but I want to talk about what you've been thinking about and talking about the last couple of years, and we touched on that in the beginning of the show, but I want you to reiterate it because it's so important what happened with this election?
Speaker 3:Well, with the election. So the Trump era, tax cuts were supposed to sunset, you know, at the end of 2025. So, going into 2026, we were really concerned about the dropping of that estate value, you know, from 14 million down to 7 million and exposing families to a 40% federal tax. On what were the differences? And if you take a look at that, if something had not or does not change on December 31st 2025, you could have an exclusion amount of 14 million. Wake up the next day and your exclusion amount is only seven per person 28 per couple in 2025, 14 million per couple in 2026.
Speaker 3:What we believe, and what has been talked about openly, is that there will be some continuation, with the Republicans having the presidency, the Senate and the House, that there will be some continuation of that higher exclusionary amount. That is not a guarantee. Nobody has a crystal ball and when we sit down, we talk about trusts and taking legal action, you have to base it on what you know today in order to protect the risk of what might come tomorrow. Right, and so when we sit down and take a look at that, we've been spending a lot of time with those families in those net worths that are, you know 15, 20, 30, 40, 50 million dollars on a comprehensive plan. But if you take a look at some of the prices that you've been getting in some of these sales, you're exactly correct. You know you have families that are in that area, that have never been in that area before, and it's important to have that conversation. It does not take much to get over $7 million for, you know, grandmother, you know from a legacy asset, and what does that look like and how do we help her avoid, you know, having to pay 40%, you know, federal estate tax on anything that might be over that amount.
Speaker 3:Yeah, and so if we take a look at that, what we're looking for and what we're anticipating and we do a lot of conversations with professionals all across Washington DC and elsewhere about what this might happen, right, and so when we sit down we take a look at it, we're anticipating that there might be an extension, but we're repairing like there's not.
Speaker 3:We don't ever want to be caught off guard, so let's make the best plans that we can and then talk about what the flexibility is if it changes. And so one of the examples that we have is we have a client that took advantage of the slat amount that was available two years ago at about $12 million. Well, that number has now grown to 14. We've been able to add two more million dollars of assets to that SLAT that Sponsor Lifetime Access Trust in order for us to exclude that from the estate if it were to go back to 14, if it go back to 7 million per person. So again, there's flexibility in the plans and we talk openly and honestly with the attorneys leading the way about what the outcome could be. So we do a lot of conversations about if this, then that, and so for us it's just making sure that people have the education, the knowledge, to make the best decisions possible for their unique situation.
Speaker 2:Wow, that's again a lot to unpackage. And when you mention those terms, and I'm, and I, when you mentioned those terms and those dates, and I'm thinking about what did I do? And then I think about, you know, I have two sets of grandparents, and, and, and one set of grandparents did a lot of estate planning, a lot, and the other set didn't. And you know, and I don't think they thought that they were wealthy. You know, we talked about that earlier.
Speaker 2:I think that you know they had a nice farm in west central Minnesota and it raised three kids on it and then the next generation, which is my generation, were all there and you know, and some of them are farming and some aren't, but you know, it just kind of left everything. You know they did split up some of the farms, so I appreciate that and gave each kid their own farmland, kid their own, their own, their own farmland. But I don't think they thought they were wealthy. And when you actually write it down, when you sit with somebody like you and spell it out, it's, it's, it's impressive what, what, what they've they've done. And their bank accounts probably weren't very, weren't very bulging, but their asset list was really impressive.
Speaker 3:Well, and you and I shared this when we were talking in Bismarck, we had the 84-year-old widow who thought she had about $2 million to $3 million in farmland here in Cass County.
Speaker 2:Yep.
Speaker 3:And we just had to bring up because that's how she's been functioning for the last 14 to 15 years Yep, and kind of came upon her through, you know, through the seminars and through the contact.
Speaker 3:And as we sat down and looked at it, it's $7.5 million of farmland that she was getting, valuations of, cash rent, and in her mind I can't fault her, because Covey talks about unconscious incompetence. You can't know what you don't know, so find an expert to help you out, and she needed an advocate a long time ago. But we can't put that toothpaste back in the tube, but we can help you out today and the time that we spent talking to her about what's important and what she wants to see happen was powerful, because it's not just a legacy onto her children, but she also wants to be charitable as well and she's giving back to the school district, she's giving back to the church, she's giving back to the things that are important to her, that helped make her small town go, and so, again, it's heartwarming when you see those situations where you step in and can truly help somebody realize their dreams.
Speaker 2:Well, we are out of time. John, I'm going to have you back on later this year to see how everything unfolds when we get closer to the end of the year. But again, give your phone number and an email address again.
Speaker 3:Again at Heartland Trust Company. It's John Benson, 701-235-2002 or john at heartlandtrustcom. And also the coffee and the questions are always free. The most important thing that you can do is advocate for yourself, ask the questions and then see what the best route is forward.
Speaker 2:Well said, well said. All right. As we close out today's show, I want to thank Pfeiffer's Auction Realty and Pfeiffer's Land Management. Pfeiffer's team of landing equipment auctioneers, real estate agents and land managers will give you free consultation on selling your landing equipment or managing your farmland. Nobody does it better than the team at Pfeiffer's. Thanks all and stay tuned for next week's segment. It'll be another exciting one, take care.