-3- 



Use of Trustees 



In Massachusetts, T/hen there is no will, the surviving spouse inherits one- 

 third of the estate and the children inherit two-thirds. If the children are 

 minors, it vriLll be necessary to have guardians appointed and here again the court 

 may \Tell direct the sale of the fanning business during the guardianship. 



If minors are to inherit, it is often wise to appoint a trustee under the 

 will to hold and manage the property - at least until the minor children come of 

 age. A simple trust arrangement will often prove far more effective and practical 

 than a guardianship. For example, a guardian must furnish a bond, but a trustee 

 need not do so, A guardian must petition the court (involving legal expense to the 

 estate) for authority to act. Such costs can be avoided by providing proper power 

 to the trustee. 



Setting up a trust arrangement under the will may be the best way to assure 

 continued operation without conflict where several children (minors or not) and 

 various other beneficiaries are involved. A trust arrangement can be worked out 

 to guarantee the trustees all the powers and discretion they may need to continue 

 the business. 



Tax Considerations 



A good many small farming businesses are ovmed jointly by husband and wife, 

 father and son, two brothers or the like. In those cases, the v/ills of the owners 

 can have a direct bearing on the taxes levied upon the estate and the business. 

 The relationship of the will and taxes shoxad be clearly understood. An oimer 

 should consider taxes in relation to wills and estate planning. Tax problems 

 are complex and exper t advice should be sought . In particular the appraisal of 

 estate assets "Xf^^'^er's property) made~ih connection vath the probate of a will 

 or administration of an estate should be considered carefully. 



Most estates will have various depreciable assets, such as buildings and 

 equipment, which may be held or disposed of according to the provisions of a 

 will, ViThen the property is appraised (valuec$ in connection with the will, there 

 seems frequently to be a desire to get an appraisal "as lov: as the law permits," 

 Actually, a market-value appraisal is desirable. The appraisal can have far 

 reaching effects upon later allowable depreciation, and hence, on net income and 

 future tax liability of the farming business. It is important to get a completely 

 fair judgment of values. The average estate-tax rate (if a tax is due) on the 

 deceased person's half may prove to be more economical than future capital gains tax. 



In addition, when inventories in an estate such as crops or feed and supplies 

 are appraised at the selling price, this can avoid ordinary income tax on the 

 operating profit. 



Family Cor-Qorations 



The comments just made on appraisals of assets for Federal estate tax purposes 

 do not apply to corporations. Only the capital stock itself in the case of corp- 

 orations acquires a nevir adjusted-cost basis. 



