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Let’s hear the story of Nebraska, its communities, its number one industry Agriculture, and the people who make it happen. Sponsored by Nebraska's Law Firm® - Rembolt Ludtke.
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Anthony Aerts--Nebraska Born, Stanford Sharpened, Ag Focused
In this episode we visit with Anthony Aerts, an attorney with Rembolt Ludtke who leads the Firm's Ag Practice Group. Anthony grew up on a farm in Nebraska's Bohemian Alps region, attended college at Stanford University and law school at the University of Nebraska College of Law. Anthony shares his insights on legal issues impacting Nebraska agriculture, including estate tax changes contained in the recent federal tax legislation.
Welcome to 93, the podcast, where we talk about Nebraska, its communities, its number one industry agriculture, and the people who make it happen. I'm Mark Folson, your host for today's episode, brought to you by Nebraska's law firm, Rembolt Lutke. In today's episode, we're going to chat with a native son of Nebraska's Bohemian Alps. He's a farm kid who grew up and today practices law with Rembolt Lutke and leads the firm's agriculture practice group. Anthony Arts, thanks for joining us. Thanks, Mark. So give folks your background, including what it was like to grow up in the Bohemian Alps of Nebraska.
SPEAKER_02:So first off, I think we needed to define what the Bohemian Alps are for people who may not know. And so I grew up on a family farm uh about eight miles south of David City. And so that's in Butler County, which the license plate number is 25. Thank you. So the Bohemian Alps, I would say, is kind of an area that you know stretches from, let's say, you know, Valparaiso to the east, um, you know, kind of down around Seward area to the south, up towards David City to the north, and to the west, it probably cuts off on Highway 15. And why it has that name, I'm not exactly sure, but the topography of that area is kind of fairly steep, uh sloping hills and uh a lot of farm ground and a lot of people from Czech and German background and everything. And and even my family itself is like my mom's side is 100% Czech, like spoke spoke Czech in the home growing up a little bit and stuff like that. So I think that's where the name comes from.
SPEAKER_01:But don't they do some road races either by bicycle or running out that way?
SPEAKER_02:It's actually by so like probably even closer to our family's farm would be the town or village of Brainerd, and that's where I went to high school at East Butler. And uh our cross country and track coach there for several decades actually organized uh ultra marathon road race in and around the hills by Brainerd. On gravel roads, on gravel roads, dirt roads, what time of year? Uh it's in it's in uh so the ultra marathon is in uh I'm gonna mess this up. I think the like the half marathon and the four mile race and stuff are in September and the ultra marathons in October, or vice versa? Not like July, not like the middle of July, because even when it gets hot in those fall months, it's a tough, it's a tough race. I actually did it when I was 20. And so, and it's uh uh I ran I ran the first part of it and I walked and crawled the second part of it.
SPEAKER_01:So do you come from a big family?
SPEAKER_02:Oh yeah. So I actually am the oldest of eight kids. Um, and so uh my youngest sister is actually uh a junior at or just finished her junior year at Nebraska Wesleyan here in town, and so there's a pretty good spread between us, and uh I think that's a big family in this day and age.
SPEAKER_01:So you grew up on a farm. Describe for our listeners what that farm consisted of, and has it changed or does it still exist?
SPEAKER_02:Yep, it still exists, still an active farm. My dad and my brother um are both back still uh actively farming. I think I was would have been the fifth generation um on that farm. And so it would have been my great-great-grandpa that kind of homesteaded or started it. Um, and for a long forment, you know, for a long time, it's just a conventional row crop uh operation, corn and soybeans. Um, back around 1990, somewhere in there, my dad made the decision to get into commercial uh poultry production. Um and so has been, we've been doing that ever since. So, you know, 30, 35 years or so have been doing that. And um that has allowed us to also then expand beyond just the commercial uh or the conventional row crop production and to do a little bit of organic crop production on a larger scale, uh, which has been nice from a diversity standpoint.
SPEAKER_01:So, what types of crops do you grow or organically?
SPEAKER_02:Well, I mean, and again, I should clarify I I do very little at the farm nowadays. I'm mostly here at practicing law. Mostly here at the law firm, but uh, but but the people who are doing the the real work, uh, I mean, it's mostly just gonna be your corn and your soybeans, but both a combination of feed grade and food grade. And what I mean by that is what would go into like feeding livestock who are who are being raised for organic production versus food grade might go into like you know, organic tortilla chips or you know, things like that. Um, so that's all that's the most common, but there have been a couple uh rotations in the past that I can remember where there was some uh like popcorn. Um, and then additionally, uh something I've always thought was interesting is um some soybeans that were slated for um like potentially like tofu production, and they actually have um the way that they're I guess you know structured is they don't have that black layer spot in them so that you don't end up with gray tofu when you grind it up. I think I'm saying that right.
SPEAKER_01:I didn't know you were such an expert on tofu.
SPEAKER_02:I didn't I didn't know either, but I learned that little bit.
SPEAKER_01:So are there any lessons that you learned growing up on a farm that you still uh remember or still hold true today?
SPEAKER_02:You certainly install a certain work ethic uh in a person growing up on a farm. Um, you know, I started helping out and doing chores. Um, you know, I don't know necessarily completely by choice, but it's just the way it was.
SPEAKER_01:Did you still have diapers on at the time?
SPEAKER_02:I didn't still have diapers on, but it wasn't too, I mean, I probably still was wearing underwear with Superman on attention. I again I and I can just, you know, remember putting on a little pair of jeans, putting on a t-shirt, and you know, there's always something to do in the poultry barns, you know, less so necessarily doing things in the field at you know that age price, seven or eight years old. But you know, as you go along, then it wasn't, you know, it wasn't too much longer. And we're driving driving things like tractors and four-wheelers and stuff around and checking the pastures. And I think the first job I had beyond chicken barns was to cut sand burr. I think I got a penny of sandburr. So you know, if I cut 500 in a day, that was five dollars. So it makes me sound like an old timer, but it's just the way it was.
SPEAKER_01:So you ended up at Stanford for undergrad. Why Stanford?
SPEAKER_02:Oh, I don't know. I uh I guess at that point in my my life, I just had a desire to get away and try something different. And going to California seemed pretty different, and it is, and uh, and so I applied to a couple different colleges there. Um, got on, got into, I think, all of them. Um, but when it came down to the decision and it seemed pretty clear that I wanted to go, uh, I think my parents also were like, if you're gonna go there, then you should try to go to Stanford. And and it had all worked out. We went out and did a visitation and were really taken by the school, and and it was a really good experience too.
SPEAKER_01:So were you the only kid from your graduating class at East Butler to go to Stanford?
SPEAKER_02:I was the only kid in my graduating class of 31 people to go to Stanford. And I think I was probably there's maybe three other people from Nebraska there in our same class.
SPEAKER_01:So so after Stanford, uh, if I'm not mistaken, you did some work with the Nebraska Farm Bureau Federation?
SPEAKER_02:Yep, I stayed out in California for a couple years after I graduated and and worked, you know, a full-time job and stuff like that. But then I decided to move back home. It was time to come back home to Nebraska. Um, and so you know, I needed to find a job when I got back here. I hadn't yet decided uh completely to go to law school yet. And so I kind of had the policy background and and so um had a there was an opening at the Farm Bureau, and with my agricultural background, I thought, oh, you know, that might be a good fit. And so I basically applied to be a lobbyist down at the state capitol and and did that for about a year and a half, I think, um before ending up going to law school, which looking back on it, it was a real great introduction back into Nebraska life as an adult, you know, because I left when I was 18, came back when I was 23, 24, didn't go to school here, didn't have those connections, wasn't in a frat here, you know, didn't work in the business community here, but then all of a sudden met all these people who are involved down at the Capitol, whether it's attorneys or lobbyists or senators or whatever it is, made a lot of connections in a short time is very, very helpful.
SPEAKER_01:So had you always wanted to go to law school?
SPEAKER_02:Oh, I don't know about actually. No, I didn't always want to go to law school. I thought growing up, I thought I was gonna be a doctor. I wanted to be a doctor, was in job shadowing at the Davis City Clinic. Somebody came in, they had their hand caught in a circular saw, and I was on the ground. In about three seconds, I woke up, doctor had a pop in my hand. He said, You don't look good at all. He said, You might just sit over here, and I thought this probably isn't a good fit for me. I have some siblings that went into medicine and they're better suited. But um, but I was I would say probably, you know, undergrad, I studied public policy. That was kind of an economics background, but then also there was a legal bent to it. And then, you know, as I moved along through my, you know, I worked for a while before I went to law school. I guess it was non-traditional student or whatever they call it. Um, you know, as I moved along, I was always most impressed by the lawyers in the room. I just always felt like whether they were practicing law per se or not, I just appreciated the way they, you know, handled situations, thought about situations, managed a group, managed a conversation. I just always admired that. And so I thought even if I don't end up practicing law, I just want to have that sort of methodology and and um you know, sort of framework for going about my professional career. And and uh, and so I it was that admiration kind of for always the lawyers in the room that sort of led me to go to law school.
SPEAKER_01:So you went to Nebraska?
SPEAKER_02:Went to uh he up here in Lincoln at University of Nebraska Law School. And so uh, which was a which was again a a chance to you know get to know more people in town, make new friends, uh, and really, you know, learn learn a lot about I mean they do a lot of classes there that are Nebraska specific, you know, land use law or local, state, and government, water law, you know, covering those kind of things that um you know have been helpful than going into actual practice of law here at this firm.
SPEAKER_01:So if someone asks you what kind of law you practice, what do you tell them?
SPEAKER_02:Oh, I usually tell them generally speaking, I practice transactional law, which means I don't I tried my best to stay out of the courtroom, uh, which I've done pretty good at for the last eight years. But um, but I but but I say it that way just because you know, we also talk about agricultural law, farm law, whatever that is, that's a bigger umbrella, right? I mean, both of us practice agricultural law, we do very different things on a day-to-day basis.
SPEAKER_01:I wouldn't even know how to do an estate plan, and you do a ton of them.
SPEAKER_02:And if I see an employment agreement come up and I go running to your office. And so uh, you know, the the I what I tell people is I do transactional law. So I do real estate, estate planning, post-death administration, business transactions, and then a little bit of governmental representation as well. And there's of course tax planning that works into all of those categories. That's my little that's my category of law practice, which obviously involves agricultural law practice because if you practice law in Nebraska, you practice agricultural law because ag's our biggest, you know, sector of our economy. You're gonna deal with ag people, you're gonna deal with ag facts. And so I do transactional law with a folk with a lot of clients who are ag based clients.
SPEAKER_01:And do you have do you have clients uh that you do work for across the entire state?
SPEAKER_02:Yep, definitely across the entire state. I mean, uh, you know, north, south, east, and west and stuff. And obviously with our seward office that we have here at our firm, our satellite office out in Seward, if you'd want to call it that, um, that allows us to really, I mean, we definitely have a concentration in the Seward, York, Butler County, you know, Clay County, I mean, all around their area, but maybe it goes way further west. And, you know, um, just was on the phone the other day with clients from, you know, out in the panhandle, clients from up in, you know, Valentine area. I mean, it it stretches the whole state. And I think that's true of most attorneys here at our firm. We definitely crisscross the state.
SPEAKER_01:So how often are you in the seward office?
SPEAKER_02:I'm out at the seward office dedicated day, uh, one day a week, which is Wednesdays. Um, we also have two other attorneys who are out there um on their own dedicated days. We have so we have a full attorney coverage out at our seward office the entire week. Um, just a couple weeks ago, though, I was out there on a Tuesday because a family wanted to meet during that time, and that was the time they were going to be passing through town. And so, you know, it's 20 minutes away. So, like it's not hard to get out there, and it's a great, great spot for us to meet with clients who don't care to come into downtown Lincoln, um, navigate the one-way streets, parking meters, and things like that.
SPEAKER_01:So, if you're um visiting with a group of Nebraska farmers or ranchers and they want to know what the top legal issues or concerns that they should be worried about, what would you tell them?
SPEAKER_02:I mean, I think that uh number one issue that I talk to clients about who have a farm or ranch that they're trying to protect and plan for is just this concept of succession planning, which again is a is a big umbrella issue that encompasses things like estate planning, taxation planning, um, business entity legal liability protection planning. Um, it's basically taking the steps that need to be taken from a legal and business perspective to ensure that you are able to pass on your family farm or ranch enterprise in the most efficient way possible, lowest taxes, and also trying to minimize the risk of family disunity down the road, you know? And so uh certainly estate planning is a big piece of that, but it's not the only part of that. And and I think it causes a lot of anxiety because I mean there's there's less and less people who are coming back to the farm. So you often have situations where you have certain on-farm errors, off-farm errors, as we call them, some people who uh plan to make their livelihood continuing on that farmer ranch, other people who have moved to the coast like I did for a while and don't have any interest in coming back onto that land, but probably have an interest in getting a little value out of it. So, how do you make that work? You know, uh certainly if I'm a farmer rancher, I don't I don't want to like in my family. I don't suspect my brother wants to have eight different landlords someday, you know. And so how do you make that work? How do you plan that out? It's a tough puzzle, but uh everyone has their own way of solving it.
SPEAKER_01:Is there a certain income level, certain amount of value that you go from a simple will to what we'll call an estate plan? What's the difference between those two?
SPEAKER_02:Well, I mean, an estate plan is is just uh the collection of documents that are put together to pass your assets on at the time of your death and to nominate somebody to administer your affairs at the time of your death. And so, like I tell clients in meetings, the will is gonna be your backbone of every estate plan. If you don't have a will, you don't really have an estate plan for the most part. Um, but for a lot of people, a simple will is not gonna be enough to accomplish all of their planning objectives and goals. And so, for example, in the farming context, very common. I just had a phone will call right before I walked in here with somebody about this. Super common to have some kind of a trust. I mean, a trust is gonna allow you with that more sophisticated post-death planning, you know, upon so-and-so's passing, hold the farm assets in trust for a certain period of time, let that farming kid get their feet underneath them. At a certain point, then, you know, maybe there is a distribution out or a buyout or some kind of first rights refusal, but you know, allow for the continuity of the business. And then beyond that, you know, what are we doing with the real estate? Um, how are we planning for that? Are we trying to avoid probate in terms of whether or not your income or your asset worth level is what dictates the type of plan, there's certainly something to that. I mean, the higher net worth you are, probably the more trust you have in your life, unfortunately, just because they allow for not only um kind of the distribution of those assets or administration, but there's also a certain amount of tax planning that can be accomplished with trust. And so certainly um if you're at a higher net worth level, then you're also gonna start to worry about federal state tax and need to take some steps to avoid that tax.
SPEAKER_01:What's probate?
SPEAKER_02:Probate is that's a good common question. Probate is simply uh in certain cases, if you pass away owning assets in your individual name, Nebraska law says you can't just your survivors, your personal representative, your trust, you know, you're you can't just take and distribute them out to the next generation. There's there has to be some oversight. And so probate is that oversight. So it's a court supervised process where somebody is appointed and recognized by the county court to act as what's called like the personal representative, or sometimes people call it the executor. And then their role is to account for all the assets of the person who passed away, notify creditors, file an inventory stating what those assets are, and to make sure basically the estate gets administered in accordance with that person's will. And so it's not the end of the world, I tell people, but it's an extra step. And for some people, they take the position, not my problem, which isn't, which is true, but they all but then additionally, there are some, there are some times um where folks basically say, I want to try to do what I can to make it easier on my survivors. And I'll tell you what really gets people to think about planning for probate. I say it's a good thing for attorneys. And they say, Well, show me what I can do to avoid it. So yeah, it's expense. It can be expensive, right? Really expensive.
SPEAKER_01:I mean, and take a long time.
SPEAKER_02:And take a long time. Simplest probate's probably gonna be several thousands of dollars and you have to leave it open for no less than five months. And so it's not that you can't be doing things to administer the estate while you're going through the probate, but it is something that um if you're trying to uh minimize the amount of hoops that your survivors have to jump through to finish an estate administration, then planning to avoid probate, I should have said.
SPEAKER_01:Yeah. Um, so one of the issues you've mentioned and other estate planners have mentioned, is that the exemption, the federal exemption for estate tax. Uh it's my understanding that may have been addressed in the recent tax bill, the the one big beautiful bill, I think is what they call it. Uh, was that addressed and what happened?
SPEAKER_02:It was addressed. It was so so back in 2017, right before the first um Trump bill, the exemption was at a lower level. You know, I want to probably memory filling a little bit, but I want to say kind of around that higher 5 million, around 6 million level. Well, then with the with that first Trump tax bill in 2017-18, it basically doubled it. And so, like ever since 2018 up till recently, we we have been operating under a historically high federal estate tax exemption. And what I mean by federal estate tax exemption is that's the number, that's the value of asset worth that a person can transfer either during their lifetime or upon their death without having to worry about paying that 40%, 40% federal estate tax to the to the federal government. And so when that doubling happened, then that resulted in um that exemption being higher than it's ever been, which gave us more flexibility as estate planning attorneys. Um, and and most recently, like this year, that number is$13.99 million dollars per person. And so if you have a, you know, if you have a married couple, you know, you're looking at an exemption level that's you know up close to 28 million. Now, um The the catch though is that that that was scheduled. The compromise back in the 18 was that it was going to sunset at the end of this year. And it would have then gone from that higher level back to kind of those pre-2018 levels, which when you adjust for inflation, probably would have got us back to around$7 million per person, which is admittedly still a high number. I mean,$7 million times two,$14 million, but it's not that high for a lot of farm families who own agricultural land and stuff. And so now with the new tax bill, they basically got rid of the sunset or continued that high. What they did is they just said, let's set it at a new level,$15 million per person indexed to inflation going forward. So your new baseline now is$15 per person,$30 million per married couple.
SPEAKER_01:Yeah, I don't few will disagree or disagree that that look, it is a lot of money, right? That's a high number. But if you're above that number, you actually have to liquidate your assets, sell off that farm ground in order to pay, just pay a federal tax.
SPEAKER_02:Yeah, it's a it's a big number, but I was just thinking, like, okay, it's like it's a 2,000-acre farm is not out of the ordinary in this day and age, right? There's been consolidation, you know, machinery's bigger, people are farming more. If you own 2,000 acres, at least at this part of the state, like you're already in that$20 to$30 million range. Right. Right. And then you probably have some machinery on top of that. You maybe have some money stuck away. You maybe have a house, you maybe have some, you know, investments, you're right there, even at the higher level. And so um, yeah, at some point it's like, where are you gonna? 40%'s a pretty big tax. You know, where is that money coming from? Some people have life insurance, you know, but a lot of people don't. And, you know, in any event, people are gonna want to try to, you know, most people are saying, oh, I want to try to leave it to my next generation, everything I worked for. I don't want to have to sell, you know, especially not the family farm, but really any farm ground to have to pay such a big tax. And so what can I do to try to um, you know, mitigate some of that impact and stuff like that?
SPEAKER_01:So is one of the things that you do is do you draft ag like farm leases, pasture leases, range leases?
SPEAKER_02:Yep, we definitely do a lot of that. And, you know, that's just good, guess just good farm management because, you know, even as part of that succession planning conversation that we have, um, I mean, it kind of depends are you doing landlord tenant and stuff like that. But either way, it's it's important to have your legal rights clearly defined, you know, because you don't want to work your whole life and then have something go wrong, some dispute happen, you know, end up with some kind of liability that wasn't clearly defined. And so we draft a lot of pasture leases. I mean, hey, the handshake is still a pretty good way to do business, um, you know, in in these in these parts, definitely in the Bohemian Alp, I know that's the that's the kind of the contract of choice, so to speak. But, you know, you don't need a written contract until you need a written contract. And at that point, it's too late because some disagreement or ambiguity arose, and then you're saying, well, what's the rule that we agreed on? Oh, we didn't have one, we just shook hands. Now what? You know, you can either figure it out, which is great, but if you don't, then you're in court.
SPEAKER_01:So you're paying litigators to fight, and that's not a quick process.
SPEAKER_02:Then your side of agricultural law practice comes up.
SPEAKER_01:So I did just today I had a client, we were talking about some legal needs, needed a particular uh agreement, let's say a lease for some ag land, and they said that they didn't want to spend the time or the money, that they just did it uh by themselves on chat GPT. Have you have you had clients say that? And what have you seen as far as what these AI tools put out and whether it's actually does what it needs to do in the state of Nebraska?
SPEAKER_02:Well, I mean, I think the AI tools are they're impressive at what they can do and their ability to aggregate information, but they're just basically just pulling and and reflecting like a mirror what they see across the internet. I mean, it's not it's not an analytical. I mean, I probably somebody's gonna disagree with me, but I mean, on some level, there's just no way that that AI tool is reflecting all the nuances of one Nebraska law, two, that particular farmland parcel, three, the very specialized needs of each of the landlord and tenant parties to that agreement. Um, it's not gonna do that. And so the only way that can be done is if you actually have a real conversation with the real person who digs into and say what actually matters to you, what needs to happen with this lease. Um, are there certain things about it that are specialized or unique? Um, that's not, I just don't think that's happening with an AI tool.
SPEAKER_01:Yeah, and I don't think it would get there in our live team because again, every every transaction is unique. There's something that can each party is most concerned about. Uh, I'll give you an example, even just using Chat GPT, it's not going to address nuances like who gets to participate in in the various farm programs and gets to collect the benefits from that. Are there issues regarding certain segments of that plot of ground regarding erosion that you want to make sure the tenant's actually taken care of? I mean, all those things. And uh computer can't just generate that on its own.
SPEAKER_02:Right. I mean, I have had times where you know somebody has an elderly parent in the farmland still in their name, but their kids are kind of handling the leasing decisions, but they want to be able to also take a different direction if somebody passes away or if they get really sick or go into long-term care. Yeah, you aren't gonna GTP is not picking up on those kind of things and drafting that into the lease and abilities to terminate out and stuff, or adjust rental payments under certain circumstances. It's just I don't see it happening, like you said, during our lifetime anyway. And so I just think that's still the best way to do business, while maybe not as a handshake, is still with another person. Right.
SPEAKER_01:Anthony, uh, something we ask all of our guests, and you get just one word. What is one word to you that best describes this place in which you were born and raised, where you grew up on a farm up in the Bohemian Alps, where you attended law school and today you practice law? Uh, what's your one word for the state of Nebraska?
SPEAKER_02:I've been on this program before and I can't remember the word I used last time. So we'll see if I repeat myself, but this time the word that I have come up with is steady.
SPEAKER_01:So what do you mean by steady?
SPEAKER_02:Steady, just meaning focused, moving forward, you know, feet planted on the ground, um, good natured, um, optimistic. I mean, that's to me, like that's that's that's what I think of when I think of Nebraskans.
SPEAKER_01:Anthony, thanks for joining us again. If you enjoyed this episode, consider subscribing on Apple, Spotify, or wherever it is that you get your favorite podcasts. And be sure to recommend this episode to uh one of some friends, perhaps even some who might live in the Bohemian Alps area of Nebraska. And please keep on listening as we release additional episodes on Nebraska. It's great communities, it's number one industry agriculture, and the folks who make it happen.
SPEAKER_00:Thanks. This has been Nighty Three, the podcast, sponsored by Nebraska's law firm, Rumbold Ludkey.
