Six years ago, I had to be convinced to get a smart phone so I could check email while away from the office. Now I rarely don’t have the phone in pocket, whether I am in the office or on the farm. Toddlers get frustrated when the encounter TVs that don’t respond to touch like IPADS. The world is changing. As I hear from time to time, “I saw on the internet that if it is on the internet it must be true.”
Ag is no exception. Online and televised auctions for livestock are becoming all the rage. Unfortunately, just because it looks like an auction, doesn’t always mean it is conducted like the auction at the sale barn. Basically, an auction is a series of offers (will you buy at this price) followed by a rejection (any other bidders) followed by a counter offer (okay your price is agreeable to me). Auctions are covered by federal regulation if they take a commission of the sale, those who are regulated can be found at www.gipsa.usda.gov . Auctions that take a flat fee per animal may not be covered or regulated by the federal rules at all. Which makes it hard to deal with. As always, it is good to do a little back ground work and check the owners of the web site and auction company.
To report a problem you’ve encountered buying livestock, or to file a complaint, call 1-800-998-3447.
Another strong endorsement for long term care insurance by the Iowa Supreme Court
The Iowa Supreme Court recently handed down a decision allowing access to a trust by the State Medicare reimbursement service (aka Title 19 /Estate Recovery) that only allowed access to the income by the people who established the trust.
IN 1991, a married couple put their farms in trust, stating that the income was to be paid to the both of them while they were alive and when they both die, it would pass to their kids. The trust had a provision that said if no other resources were available at death, any debts owed would be paid by the trust.
The wife went on Title 19 in 2000 and died in 2002 with a bill of $53,118.62 due the state. The state said no assets were available to recover. IN 2002, the husband went on title 19 as well. He died in 2009 with a bill of $251,254.12.This time, the state said they should be paid by the trust, not only for the husband but also for the wife.
The Supreme Court had to determine if the trust had to pay up. The court determined that Medicare recovery is personal debt, not just an estate debt. That is a broader definition that the federal recovery rules use. Because the trust said pay all debts, Medicare was able to get a seat at the table. The court also found that, just like with life estates, even though the spouses interest in the trust stops when they die, the responsibility to pay for their personal debt through the date of death, for Medicare, remained.
This case puts some question on the use of income only, irrevocable trusts, even when the husband and wife gave up control of the assets a number of years ago, potentially paid gift taxes and skipped the potential of stepped up basis in the event the ground has to be sold. The practical result appears to be that since 1991 the husband and wife received only the income off the farm, with no control (though that is debatable if mom and dad ever really stop being in control in most family farms), and when their children got the asset in 2009 post death, they had to pay over $300,000 to the state and then capital gains tax basis was set at 1991 levels. As most are well aware, 1991 and 2009 land valuations were significantly different.
