Protecting Farm Operations in a Changing Tax Landscape
Long-Term Healthcare
This expense can have a devastating impact on a farm operation. Many farmers can recall a farm in their community that had to be sold to cover nursing home costs. Medicaid estate recovery often plays a role when a person applies for Medicaid and must spend down their cash assets. Once Medicaid pays for long-term care, it can file a lien against the estate, forcing the sale of assets like land. Surprisingly, many people are unaware of Medicaid's ability to do this. In Indiana, a mandatory report is made for estates of individuals over 55. However, proper planning can make a difference. For instance, holding land in an LLC can limit Medicaid's reach. If the deceased owned less than 50% of the LLC, their shares may have little market value. Many LLC operating agreements also have strict transfer rules. In Indiana, Medicaid Estate Recovery has rarely sought to enforce a lien against an LLC. In most states, an LLC combined with a revocable trust provides a strong defense against Medicaid liens. Studies show that a significant portion of people will need long-term care, but only a small percentage have insurance. The average cost of a nursing home is $10,000 per month, making it crucial for farmers to plan.Lawsuits and Penalties
Lawsuits and environmental penalties can sink a farm faster than the federal estate tax. For example, a semi-truck accident can lead to a multimillion-dollar lawsuit, and a large fertilizer spill can result in fines and cleanup costs. If a farmer causes harm to a lake and its recreational activities, they may face additional lawsuits. Insurance may not be enough to protect against such liabilities.Legal Entities
Farmers need to ensure their farms are structured properly to withstand legal challenges. Utilizing legal entities can help a farm operation survive lawsuits. However, it's essential to take steps to prevent a plaintiff's lawyer from "piercing the veil" of the companies. In most states, not maintaining proper company records can open the door to personal liability. Regularly updating minute books and following proper procedures is crucial. Sadly, many people neglect these aspects, leading to a false sense of security.Wills and Trusts
With the increased value of farm estates, heirs are more likely to contest wills and trusts. Even with a well-thought-out estate plan, one disgruntled heir can cause expensive litigation. Some states allow for "pre-mortem validation," where heirs can contest a will or trust while the person is alive. Having a no-contest clause in a will or trust can discourage such actions. It's important to address these issues to protect the farm estate.Now that the federal estate tax exemption is likely to remain, farmers should focus on the factors that can harm their operations during the slower winter months. These articles provide general information and should not be considered legal advice. Laws vary by state, and specific situations may require professional legal guidance.John J. Schwarz, II, a lifelong farmer and 18-year agricultural law attorney, and Natalie Boocher, an elder law attorney, contributed to this article. They can be reached at 1-844-FARMLAW and www.thefarmlawyer.com. Go to www.farmlegacy.blogspot.com for past articles.Unraveling the Crypto Revolution under the Trump Administration
Bitcoin's Post-Election Boom
On Election Day, bitcoin was worth $69,374 according to Coinbase. Within a month, it spiked more than 44 percent, reaching a milestone of over $100,000 for the first time. This surge wasn't isolated to bitcoin; other cryptocurrencies like ethereum and XRP also saw significant growth during this period. The sudden increase in value is a clear sign of investor optimism about President-elect Donald Trump's policies and those of his picks to head key regulatory agencies. Some of these nominees have explicitly promised deregulation of the crypto industry, which has triggered a flood of money into these markets.As Ramaa Vasudevan, an economics professor at Colorado State University, pointed out, "That bitcoin hit the $100,000 mark reflects the expectation of both political support and regulatory latitude under the incoming administration." The nomination of crypto-enthusiasts for administrative posts has sent a strong signal of the embrace of bitcoin and crypto.
Trump's election may have sparked the initial rally, but the financial establishment's growing acceptance of bitcoin in recent months provided the necessary fuel. Once a niche curiosity, bitcoin is now a mainstream digital currency that everyday Americans can invest in through reputable retail investment accounts. This increased legitimacy has given bitcoin some staying power, even if it is still debated whether it is a bubble or a legitimate investment.
Trump's Crypto Support and Regulatory Choices
Throughout his presidential campaign, Trump has been a staunch supporter of cryptocurrencies. His choices to lead key government agencies related to crypto regulation reflect this enthusiasm. For example, the nomination of Paul Atkins to head the Securities and Exchange Commission (SEC) was a significant event. Atkins, who was previously an SEC commissioner during George W. Bush's administration, is seen as a pro-deregulation figure.Molly White, a cryptocurrency researcher and critic, noted that "Atkins is fairly establishment; he has the SEC background, but he also was a very strong advocate for deregulation when he was in the SEC and certainly since then." Atkins is also a co-chair of the Chamber of Digital Commerce's Token Alliance, which advocates for lax regulation of cryptocurrencies.
Perianne Boring, the CEO of the Chamber of Digital Commerce, is rumored to be one of Trump's top picks to head the Commodity Futures Trading Commission (CFTC). Currently, cryptocurrency is under the purview of the SEC, but the Trump administration is considering regulating it as a commodity instead, which would bring it under the CFTC's jurisdiction. This change could have a significant impact on the regulatory landscape of cryptocurrencies.
Bitcoin's Establishment as a Digital Asset
Over the past five years, especially after the downfall of crypto trading platform FTX in 2022, the narrative around cryptocurrency's utility has shifted. It is now being promoted more as an investment instrument rather than a currency for daily transactions. This pivot has also contributed to its valuation.In January, the SEC approved the first bitcoin exchange-traded funds (ETFs) in the US. ETFs provide indirect access to cryptocurrency, allowing investors to participate in the market without directly buying and storing bitcoin. Firms like BlackRock, Invesco, Fidelity, Grayscale, and Ark Invest have launched bitcoin funds, offering new investors easier ways to invest in cryptocurrency.
Previously, investors had limited options for trading bitcoin. They could buy it on an exchange but faced challenges in storing it safely. Now, ETFs offer an established and regulated option. However, as Swati Sharma, Vox Editor-in-Chief, mentioned, "While no one can predict the exact inflection point or when the price will stabilize, the long-term driver of bitcoin's rise is its evolution — not just as digital gold, but as a foundational layer of global financial infrastructure."
Despite the optimism, there are concerns. Vasudevan warned that there is still reason to believe that crypto's climb won't last forever. Bitcoin has surged before only to crash precipitously, as seen in November 2022 after the FTX collapse. The price of crypto is still based largely on speculation rather than inherent value.
Uncovering the Crypto Influence in Elections
Understanding the Crypto Phenomenon
Cryptocurrencies are digital assets that operate independently of a country or financial institution. They rely on a blockchain, a secure and decentralized virtual ledger that meticulously records every transaction. Industry research indicates that those who own cryptocurrency are typically young and racially diverse. They view cryptocurrency as a means to gain more control and freedom over their financial lives. Overall, they advocate for clearer regulations and seek candidates who are open to emerging technologies.For instance, Brad Garlinghouse, the CEO of Ripple, whose cryptocurrency XRP is one of the largest in the world, emphasizes the significance of this industry. He believes that those who underestimate the passion of crypto enthusiasts are missing a crucial aspect. Cryptocurrencies offer a unique financial alternative that attracts a specific demographic.
The voter base for cryptocurrencies is on the rise and presents an opportunity. While they support policies favorable to the industry, crypto voters do not have a unified stance on which party will best serve their interests. Most research shows a near-even split between support for the Republican and Democratic parties.
The Role of Advocacy Organizations
To assist voters in making informed decisions, the advocacy organization Stand With Crypto assigns grades to politicians based on their statements about the industry. President-elect Donald Trump received an A grade. Initially critical of bitcoin in 2021, Trump has since embraced the industry. He even announced his new cryptocurrency business, World Liberty Financial, and appointed David Sacks as his "White House A.I. & Crypto Czar," highlighting his intention to boost the crypto sector.On the other hand, John Reed Stark, a former chief of internet enforcement at the Securities and Exchange Commission, is critical of crypto. He understands the reasons behind people's interest but maintains that cryptocurrency is dangerous. He believes that the financial crisis led to a lack of trust in institutions, which contributed to the appeal of cryptocurrency.
However, the industry was not straightforward in making crypto connections in its ads. For example, Democrat Rep. Katie Porter in California was criticized for cryptocurrency mining in a letter she co-signed with a known crypto skeptic. But during her Senate primary, every negative ad against her was funded by crypto, highlighting the complex nature of the crypto influence in elections.
The Crypto Industry's Campaign Spending
In this year's election, the crypto industry supported 29 Republicans and 33 Democrats. The largest crypto industry super PAC, Fairshake, started in part by Ripple, spent $131 million on ads supporting pro-crypto candidates. It also has an additional $103 million reserved for pro-crypto candidates in the mid-term elections two years from now. Interestingly, none of the television ads paid for by Fairshake this year mentioned crypto, even those against Porter.Ripple CEO Garlinghouse argues that even without direct mention of crypto, the commercials were still educating voters. But Stark is not convinced, stating that elected officials were clear in their support of crypto, and it remains to be seen if voters truly understood the implications.
The video above was produced by Brit McCandless Farmer and edited by Scott Rosann.