Larry and Brigette Leach feel lucky to be farming the land they are on. Their cash crop and hydroponic greenhouse operation is 1,200 acres in Kalamazoo County, Mich., that they inherited from Larry's grandmother, but for which they and their family paid dearly.
"Even though we'd done everything that we could from a financial planning standpoint," Brigette Leach said, "it still cost us over $450,000 to settle Grandma's estate when she died at the age of 94."
That may not sound lucky, but frugal and industrious living on the part of Larry Leach's grandmother made it possible for her heirs to keep the family farm intact after she passed away in 1998. "We were fortunate enough that we took all of Grandma's assets—every dime—plus some from my grandfather's trust to pay that off," Larry Leach said, referring to the death taxes along with accounting and legal fees. "If we hadn't have had that, we'd have had to sell some land."
Exemptions for death taxes, now at $1 million, will increase until the tax is repealed in 2010. However, it is back again in full force in 2011. Federal measures that extend relief to farmers from death taxes and capital gains taxes are in various stages of progress in the U.S. Congress.
The capital gains tax is a different issue, but is similarly detrimental to the passage of farm assets from one party to another. When farms are sold, producers pay capital gains taxes on the amount that the asset has increased in value while they owned it. A significant feature of President Bush's tax-cutting measure relieves farmers by reducing capital gains tax rates to 15% and 5%.
While the Leachs are not interested in selling their assets, they are very interested in passing them to their succeeding generation. Their daughter is an integral part of the operation and plans to stay.
"I have a really great relationship with my family. I'm not treated as the child that's come back to the farm. I'm treated as an equal with my parents and with my grandparents," Kelly Leach-VanDenBos said, reaffirming her decision to leave the animal pharmaceuticals industry in favor of coming back to her family's farm.
Including Larry Leach's mother Norma, a retired teacher who now thrives on helping run their operation, there are three active and healthy generations seeing to the success of this southern Michigan farm. On one hand, the Leach family hopes for tax relief in the future. On the other hand, Brigette Leach says they prepare as best they can to pass this farm on to their heirs. "It will be a real challenge to plan properly so that we don't have to pay for this land all over again if the estate tax laws are not repealed."
Brigette Leach is a director on the Michigan Farm Bureau Board of Directors. Her biography is available at www.michiganfarmbureau.com/press.
