Terrel L. Shields
Elite Member
- Joined
- May 2, 2002
- Professional Status
- Certified General Appraiser
- State
- Arkansas
2010 was a great year to die if you are rich. you won't pay estate taxes if you kick the bucket this year. Democrats in particular seem outraged and view that the new estate tax rate of 35% is outrageously low and has nothing to do with helping the economy. I beg to differ.
Ignore for the moment that the money earned has already had a tax paid on it. Ignore that if you are really cleaver, you can "hide" this income with an LLC, etc. etc.
I appraised an estate a few years ago. The man and wife who died, started their company in the depression. He mixed feed with a shovel after spending days tending and delivering baby birds while his wife ran the paperwork. They did this for decades and built the company to a processing plant, a large feed mill, 7,000 acres of land, cattle, homes, a small airport, and 4 hatcheries. They owned barns and a research lab.
He ran this baby until his death at well over 90 years old. http://www.petersonfarms.com/history.html
The farm still exists. But it is a shell of its former self. The processing plants and most of the hatcheries and the gas company had to be sold to pay the estate tax. I was never privy to the terms of the sale but it was almost certainly within 8 figures. And according to rumor, virtually all of it went to pay the estate tax. It sold 5 months and a few days after Mr. Peterson's death...just in time to pay the tax.
Some would argue. Big deal. The buyer still runs the facilities, etc. etc.
OK. Yes that is true, Simmons Foods purchased the plants and most of the facilities. But there were several dozen middle management, fieldmen, and supervisors who lost their jobs. These, for the most part were folks over 40 years old. Simmons already had managers and so these people were given 2 weeks notice and out the door. Only one manager kept his job. He was the last man hired and was manager of the gas company. Simmons did not own a gas company so they let him stay.
They have also sold off a significant part of the land.
Further, there were a lot of clerical staff that were also redundant and most of them (all of the office managers) lost their jobs. Again, many of the jobs were better than average jobs... not minimum wages in the plant. This has also caused a number of buildings in the small town of Decatur to be vacated...with zero demand for same it impacts property taxes, and even the number of people eating at the local cafe.
As for the operation, Peterson is now run by a grandson. He is an able administrator and likely can build the company back to a solid company but that company isn't hiring and isn't going to hire for a long time. They also have a mortgage on property that is there due to a long running lawsuit. after almost a year after the trial and 8 years after filed, the judge will rule in January. It literally may hold the fate of both Peterson and Simmons in the ruling.
The estate tax is bad for the economy and it shows in farm operations most acutely because such operations typically have a high level of assets vs. the actual income of the operation.
Ignore for the moment that the money earned has already had a tax paid on it. Ignore that if you are really cleaver, you can "hide" this income with an LLC, etc. etc.
I appraised an estate a few years ago. The man and wife who died, started their company in the depression. He mixed feed with a shovel after spending days tending and delivering baby birds while his wife ran the paperwork. They did this for decades and built the company to a processing plant, a large feed mill, 7,000 acres of land, cattle, homes, a small airport, and 4 hatcheries. They owned barns and a research lab.
He ran this baby until his death at well over 90 years old. http://www.petersonfarms.com/history.html
The farm still exists. But it is a shell of its former self. The processing plants and most of the hatcheries and the gas company had to be sold to pay the estate tax. I was never privy to the terms of the sale but it was almost certainly within 8 figures. And according to rumor, virtually all of it went to pay the estate tax. It sold 5 months and a few days after Mr. Peterson's death...just in time to pay the tax.
Some would argue. Big deal. The buyer still runs the facilities, etc. etc.
OK. Yes that is true, Simmons Foods purchased the plants and most of the facilities. But there were several dozen middle management, fieldmen, and supervisors who lost their jobs. These, for the most part were folks over 40 years old. Simmons already had managers and so these people were given 2 weeks notice and out the door. Only one manager kept his job. He was the last man hired and was manager of the gas company. Simmons did not own a gas company so they let him stay.
They have also sold off a significant part of the land.
Further, there were a lot of clerical staff that were also redundant and most of them (all of the office managers) lost their jobs. Again, many of the jobs were better than average jobs... not minimum wages in the plant. This has also caused a number of buildings in the small town of Decatur to be vacated...with zero demand for same it impacts property taxes, and even the number of people eating at the local cafe.
As for the operation, Peterson is now run by a grandson. He is an able administrator and likely can build the company back to a solid company but that company isn't hiring and isn't going to hire for a long time. They also have a mortgage on property that is there due to a long running lawsuit. after almost a year after the trial and 8 years after filed, the judge will rule in January. It literally may hold the fate of both Peterson and Simmons in the ruling.
The estate tax is bad for the economy and it shows in farm operations most acutely because such operations typically have a high level of assets vs. the actual income of the operation.
