Ag LawAg Law

Chapter #11Chapter #11Chapter #11Chapter #11

Choosing CouncilChoosing Council• Ignorance of the law is no excuseIgnorance of the law is no excuse

• Attorney’s fees are cheaper than a Attorney’s fees are cheaper than a court trialcourt trial

• Compromise is usually cheaper than Compromise is usually cheaper than a triala trial

• Attorneys vary in their competencyAttorneys vary in their competency

• Choose council that you can trustChoose council that you can trust

• An attorney that knows his/her An attorney that knows his/her limitslimits

Written Versus Oral Written Versus Oral AgreementAgreement• In most cases, a producer’s In most cases, a producer’s

handshake is good enough to “close handshake is good enough to “close a deal”a deal”

• Get agreements in writing to avoid Get agreements in writing to avoid confusion laterconfusion later

• What if one dies? Or is unsatisfied?What if one dies? Or is unsatisfied?

What is a Contract?What is a Contract?

• Legally enforceable arrangement or Legally enforceable arrangement or agreement between two or more agreement between two or more partiesparties

• Expressed Contract: parties state Expressed Contract: parties state the terms of the contract orally or in the terms of the contract orally or in writingwriting

• Inferred Contract: the actions or Inferred Contract: the actions or conduct of the parties indicate an conduct of the parties indicate an intention to contractintention to contract

Elements of a ContractElements of a Contract Two or more legal partiesTwo or more legal parties

must have legal capacity to actmust have legal capacity to act

mentally competentmentally competent

legal agelegal age

Offer and AcceptanceOffer and Acceptance

evidence that all parties intend to be bound evidence that all parties intend to be bound by agreementby agreement

offer or proposal and accepted by other partyoffer or proposal and accepted by other party

Elements of a ContractElements of a Contract Sufficient ConsiderationSufficient Consideration

promise of each party to fulfill promise of each party to fulfill contractcontract

money, goods, or a promisemoney, goods, or a promise

Must not offend public policy or Must not offend public policy or moralsmorals

contracts are not enforceable if contracts are not enforceable if unlawful or immoralunlawful or immoral

Statute of FraudsStatute of Frauds

• Certain agreements Certain agreements mustmust be in writing be in writing

• Commission for sale of real estateCommission for sale of real estate

• Contracts for more than one yearContracts for more than one year

• Promise to be responsible for debt, Promise to be responsible for debt, default, or misdoing by another persondefault, or misdoing by another person

• Agreements upon consideration of Agreements upon consideration of marriagemarriage– not agreement to marrynot agreement to marry

Statute of FraudsStatute of Frauds

• Promise of an executor to pay debts Promise of an executor to pay debts for deceased out of own pocketfor deceased out of own pocket

• Contracts for sale of goods over a Contracts for sale of goods over a certain valuecertain value

• Land leasesLand leases

Breach of ContractBreach of Contract

• Failure to comply with the terms of a contractFailure to comply with the terms of a contract

• In the event of a breach, injured party may:In the event of a breach, injured party may:

• Request completion or paymentRequest completion or payment

• Be entitled to specific performance of the Be entitled to specific performance of the contractcontract

• Agree in advance to the amount of damagesAgree in advance to the amount of damages

• Request the contract be canceledRequest the contract be canceled

Risk of NonpaymentRisk of Nonpayment• Get your payment when you deliverGet your payment when you deliver

• Checks are not cash: you don’t get your Checks are not cash: you don’t get your money until the check clears the buyers money until the check clears the buyers bank and is deposited in your accountbank and is deposited in your account

• Float: buyers use your money interest freeFloat: buyers use your money interest free

• A buyer may use a distant bank, thus take A buyer may use a distant bank, thus take a long time for the check to cleara long time for the check to clear

• Demand checks drawn on local banks, Demand checks drawn on local banks, cash, or a certified checkcash, or a certified check

Forward ContractForward Contract• You are obligated to deliver the kind, You are obligated to deliver the kind,

quality, and amount of commodity quality, and amount of commodity within the time specified, buyer within the time specified, buyer obligated to pay you the agreed priceobligated to pay you the agreed price

• If the buyer declares bankruptcy, you If the buyer declares bankruptcy, you may have to deliver the commodity, may have to deliver the commodity, but only receive partial paymentbut only receive partial payment

• Bankruptcy court requires all bills to Bankruptcy court requires all bills to be paid in full to the bankrupt firm, be paid in full to the bankrupt firm, then pays it’s debts at partial valuethen pays it’s debts at partial value

Storing CropsStoring Crops

• Get a warehouse receiptGet a warehouse receipt– can be used for collateral for loanscan be used for collateral for loans

• May possibly be soldMay possibly be sold

Safeguarding your crop or Safeguarding your crop or livestocklivestock

• Deal only with licensed warehouseman, brokers Deal only with licensed warehouseman, brokers or dealersor dealers

• Don’t be deceived by the size of a companyDon’t be deceived by the size of a company

• Investigate the financial condition of the buyer Investigate the financial condition of the buyer before forward contractingbefore forward contracting

• Demand a scale ticket marked “sold” or Demand a scale ticket marked “sold” or “storage”“storage”

• Demand payment immediately drawn on a local Demand payment immediately drawn on a local bandband

• Be on the lookout for financial instabilityBe on the lookout for financial instability

Leases and LeasingLeases and Leasing

• Cash LeaseCash Lease

• Share LeaseShare Lease

• Manager Operator or Partnership, Manager Operator or Partnership, sometimes called Profit Sharing sometimes called Profit Sharing

Cash LeaseCash Lease• Set a fixed price per acre etc.Set a fixed price per acre etc.

• Good type of lease for:Good type of lease for:– small farmsmall farm

– landlord lives a long ways awaylandlord lives a long ways away

– tenant hastenant has

• Landlord may prefer Cash Lease Landlord may prefer Cash Lease because:because:– guaranteed incomeguaranteed income

– less supervision by landlordless supervision by landlord

Cash LeaseCash Lease• Man not be preferred by landlord Man not be preferred by landlord

because:because:– generally lower incomegenerally lower income

– landlord has less control of the landlandlord has less control of the land

– may be difficult to collect lease if crop failsmay be difficult to collect lease if crop fails

• Tenants may prefer Case lease Tenants may prefer Case lease because:because:– more profit if crops are successfulmore profit if crops are successful

– may expand business and lower fixed costsmay expand business and lower fixed costs

Livestock Share LeaseLivestock Share Lease• Landlords like Livestock Share Lease becauseLandlords like Livestock Share Lease because

– they retain an active interest in managementthey retain an active interest in management

– it encourages more efficient use of resourcesit encourages more efficient use of resources

– it generally makes more returns than other leasesit generally makes more returns than other leases

• Benefits to tenants:Benefits to tenants:– less riskless risk

– gain experience from the guidance of successful gain experience from the guidance of successful ownerowner

– landlord is more willing to make improvementslandlord is more willing to make improvements

– requires less tenant’s capitalrequires less tenant’s capital

Crop Share LeaseCrop Share Lease

• Most common crop lease in U.S.Most common crop lease in U.S.

• Benefits to Landlord:Benefits to Landlord:– more opportunity for supervisionmore opportunity for supervision

– more opportunity for maximum incomemore opportunity for maximum income

• Benefits to Tenant:Benefits to Tenant:– less financial riskless financial risk

– landlord more likely to improve landlord more likely to improve productivityproductivity

Manager Operator LeaseManager Operator Lease

• Landowner and tenant specify in Landowner and tenant specify in advance who will furnish what advance who will furnish what (labor, $$, mgmt)(labor, $$, mgmt)

• Landowner usually provides all Landowner usually provides all capitalcapital

• Manager provides all the labor, Manager provides all the labor, shares in the returns by a fixed shares in the returns by a fixed percentage (35-40%)percentage (35-40%)

• Popular lease with family operationsPopular lease with family operations

Manager Operator LeaseManager Operator Lease

• Suggestions for Manager Operator Suggestions for Manager Operator Lease:Lease:

• Separate living quarters for each Separate living quarters for each

• Good recordsGood records

• Farm business large enough to support Farm business large enough to support allall

• Ability to get along with each otherAbility to get along with each other

• Revision of the agreement from time to Revision of the agreement from time to timetime

Leasing MachineryLeasing Machinery

• Financial LeaseFinancial Lease

• Use for one season, can return it thenUse for one season, can return it then

• Usually an option to buy at end of Usually an option to buy at end of leaselease

• Operator must:Operator must:– make annual paymentsmake annual payments

– make repairsmake repairs

– do the maintenancedo the maintenance

– provide shelter for the machineprovide shelter for the machine

Leasing MachineryLeasing Machinery

• Operating LeaseOperating Lease

• More than one yearMore than one year

• Not responsible for repairs, other Not responsible for repairs, other than neglectthan neglect

InsuranceInsurance

• Insurance policy pays a professional risk Insurance policy pays a professional risk taker to assume financial burden in case taker to assume financial burden in case of the unexpected.of the unexpected.

• Protects you financially from loss due to Protects you financially from loss due to fire, flood, tornado, lawsuitsfire, flood, tornado, lawsuits

• Meets obligation to others who might Meets obligation to others who might suffer injury or loss because of something suffer injury or loss because of something you didyou did

• Makes it possible for you to take risks Makes it possible for you to take risks that you otherwise wouldn’tthat you otherwise wouldn’t

Common Kinds of Common Kinds of InsuranceInsurance• Life InsuranceLife Insurance: protect against loss in : protect against loss in

the event of deaththe event of death

• Accident and HealthAccident and Health Insurance: Insurance: medical costs, loss if income due to medical costs, loss if income due to illness or accidentillness or accident

• Property InsuranceProperty Insurance: if property is : if property is damaged, destroyed, or stolendamaged, destroyed, or stolen

• Liability InsuranceLiability Insurance: protects against : protects against lawsuits if you cause personal injury lawsuits if you cause personal injury damagedamage

Points to remember when Points to remember when buying insurancebuying insurance

• Insure against losses that may lead to Insure against losses that may lead to financial disasterfinancial disaster

• Insure irreplaceable items firstInsure irreplaceable items first

• Don’t insure anything you can’t easily Don’t insure anything you can’t easily replace yourselfreplace yourself

• Adequate coverage, homes Adequate coverage, homes appreciateappreciate

• Buy insurance that provides coverage Buy insurance that provides coverage for situations which are likely to occurfor situations which are likely to occur

Legal Liabilities of Legal Liabilities of Farmers and RanchersFarmers and Ranchers

What is Negligence?What is Negligence?

• The omission by an individual to do The omission by an individual to do something which a “responsible something which a “responsible person” would do under similar person” would do under similar circumstancescircumstances

• Failure to use reasonable care under Failure to use reasonable care under the circumstancesthe circumstances

Duties towards your Duties towards your neighborneighbor• You must keep your buildings etc in You must keep your buildings etc in

good repairgood repair

• If you do something on your land, If you do something on your land, and it affects your neighbor and it affects your neighbor negatively, you are responsiblenegatively, you are responsible– ex: dig a hole, causes neighbor’s land ex: dig a hole, causes neighbor’s land

to cave into cave in

– building blows onto their landbuilding blows onto their land

Duties toward people on Duties toward people on the landthe land• InviteesInvitees

• LicenseesLicensees

• TrespassersTrespassers

InviteesInvitees• A person on your farm with your consent A person on your farm with your consent

and for your benefit, or your mutual and for your benefit, or your mutual benefitbenefit– ex: someone comes onto your land to buy ex: someone comes onto your land to buy

produce, or a hunter who pays a fee to huntproduce, or a hunter who pays a fee to hunt

– ex: a salesman who has your permission to ex: a salesman who has your permission to deliver his product, postman, contractorsdeliver his product, postman, contractors

• You have a duty to warn invitees of known You have a duty to warn invitees of known hidden dangershidden dangers

• You have a duty to inspect your property You have a duty to inspect your property for hidden dangersfor hidden dangers

LicenseesLicensees

• Someone who comes onto your land Someone who comes onto your land solely for their own pleasure, benefit or solely for their own pleasure, benefit or convenienceconvenience

• The visitor is tolerated rather than The visitor is tolerated rather than invitedinvited

– ex: hunters, guestsex: hunters, guests

• Your duty is to warn of hidden dangersYour duty is to warn of hidden dangers

• You have no obligation to make the You have no obligation to make the land safe, or make inspectionland safe, or make inspection

TrespassersTrespassers

• Someone who is not invited nor Someone who is not invited nor desired on your landdesired on your land

• You are only responsible for You are only responsible for personal injury if you intentionally personal injury if you intentionally inflict theminflict them

• You may use reasonable force to You may use reasonable force to remove trespassersremove trespassers

• May not use deadly force except for May not use deadly force except for self-defenseself-defense

Implied ConsentImplied Consent

• If you see a trespasser on your land, If you see a trespasser on your land, and you do not ask them to leaveand you do not ask them to leave

• They are then not trespassingThey are then not trespassing

Doctrine of Attractive Doctrine of Attractive NuisanceNuisance

• If you negligently keep an object or If you negligently keep an object or condition on your land that is attractive condition on your land that is attractive and dangerous to children, you will be and dangerous to children, you will be liable if a child is injuredliable if a child is injured

• Landowner must know that children Landowner must know that children trespass where the object or condition is trespass where the object or condition is locatedlocated

• Ex: machinery, buildings, refrigeratorsEx: machinery, buildings, refrigerators

• Usually doesn’t apply to natural conditions Usually doesn’t apply to natural conditions (lakes etc.)(lakes etc.)

““No Trespassing” signsNo Trespassing” signs

• Doesn’t pertain to people who:Doesn’t pertain to people who:– can’t read and understand the signcan’t read and understand the sign

– feel that the sign doesn’t apply to themfeel that the sign doesn’t apply to them

– can’t see the signcan’t see the sign

Liabilities of EmployeesLiabilities of Employees

• If you direct and control a person’s If you direct and control a person’s tasks, that person is an employeetasks, that person is an employee

• The employer is liable for the The employer is liable for the actions of all employeesactions of all employees

Laws for Agricultural Laws for Agricultural LaborLabor• Fair Labor Standards ActFair Labor Standards Act: min wage, max : min wage, max

hours, child laborhours, child labor

• Migrant & Seasonal Ag. Worker Protection Migrant & Seasonal Ag. Worker Protection Act:Act: guidelines for seasonal laborguidelines for seasonal labor

• Immigration Reform & Control ActImmigration Reform & Control Act: : penalties for employing illegal alienspenalties for employing illegal aliens

• Occupational Safety & Health ActOccupational Safety & Health Act: (OSHA) : (OSHA) provide safety in the workplace by provide safety in the workplace by eliminating hazardseliminating hazards

Employer’s Employer’s ResponsibilitiesResponsibilities• Train employees thoroughlyTrain employees thoroughly

• Provide a safe place to workProvide a safe place to work

• Provide reasonably safe tools, machineryProvide reasonably safe tools, machinery

• Warn & instruct employee of dangers Warn & instruct employee of dangers which they could not reasonably expect which they could not reasonably expect to discoverto discover

• Provide competent fellow employeesProvide competent fellow employees

• Make reasonable rules for conduct Make reasonable rules for conduct

AgentsAgents

• An agent has the authority to either An agent has the authority to either transact business or manage the transact business or manage the affairs of the employeraffairs of the employer

• Employer has less control over an Employer has less control over an agentagent

• Ex: hired farm managerEx: hired farm manager

• Employer is responsible for agent’s Employer is responsible for agent’s acts while the agent is doing your acts while the agent is doing your workwork

Independent ContractorIndependent Contractor

• A person or organization performing A person or organization performing a job without control from the a job without control from the employeremployer

• Employer only determines resultsEmployer only determines results

• Ex: custom harvester, crop duster, Ex: custom harvester, crop duster, well drillerwell driller

Independent ContractorIndependent Contractor

• In general, the employer is not In general, the employer is not responsible for the negligent acts of responsible for the negligent acts of an independent contractor except:an independent contractor except:

• negligence in hiring a competent negligence in hiring a competent contractorcontractor

• furnishing a contractor with faulty furnishing a contractor with faulty plansplans

• interfering with a contractorinterfering with a contractor

• hiring to perform a dangerous taskhiring to perform a dangerous task

Legal aspects of fencingLegal aspects of fencing

• Inside FencesInside Fences: no stipulations: no stipulations

• Boundary FencesBoundary Fences: some state laws : some state laws require landowners to enclose their require landowners to enclose their own land with a fence tight enough own land with a fence tight enough and strong enough to turn livestockand strong enough to turn livestock

• Responsibility for Responsibility for Division FencesDivision Fences: : People who build fences between their People who build fences between their property. Each usually pays halfproperty. Each usually pays half

• Check State LawsCheck State Laws

Common Laws Regarding Common Laws Regarding LivestockLivestock

• A livestock owner who maintains A livestock owner who maintains good fences, is not liable for damage good fences, is not liable for damage caused by livestock. The owner must caused by livestock. The owner must not be aware the animals are in the not be aware the animals are in the habit of breaking out, and must make habit of breaking out, and must make an immediate attempt to retake an immediate attempt to retake them when they do break outthem when they do break out

• when animals break through a when animals break through a division fence, and fence is not good, division fence, and fence is not good, animal owner may not be responsibleanimal owner may not be responsible

Common Laws Regarding Common Laws Regarding LivestockLivestock• an owner of a trespassing animal may be an owner of a trespassing animal may be

held liable if:held liable if:

• animals are in the habit of breaking out, animals are in the habit of breaking out, regardless of fence conditionregardless of fence condition

• the owner's fences are defective or the owner's fences are defective or insufficientinsufficient

• negligence such as leaving the gate open negligence such as leaving the gate open causes the trespasscauses the trespass

• animals that are driven along a road get out animals that are driven along a road get out of control and enter adjoining fields, even of control and enter adjoining fields, even though the road is not fencedthough the road is not fenced

Summary of Fence LawsSummary of Fence Laws

• if a producer is negligent in if a producer is negligent in maintaining their fences, liablemaintaining their fences, liable

• if a producer keeps fences in good if a producer keeps fences in good repair, but animals are in habit of repair, but animals are in habit of breaking out, liablebreaking out, liable

• if producer doesn't make a if producer doesn't make a reasonable effort to get animals reasonable effort to get animals back in, liableback in, liable

Handling strays (not dogs or Handling strays (not dogs or cats)cats)• landowners or local law may confine and care landowners or local law may confine and care

for straysfor strays

• a reasonable attempt must be made to locate a reasonable attempt must be made to locate ownerowner

• finder is entitled to make reasonable use of finder is entitled to make reasonable use of strays (milk cow)strays (milk cow)

• owner must pay for feed etcowner must pay for feed etc

• if owner does not claim animal:if owner does not claim animal:

– becomes property of finder, orbecomes property of finder, or

– sold at public auction, money goes into county sold at public auction, money goes into county fundsfunds

People injured by animalsPeople injured by animals

• People injured by animals: owner People injured by animals: owner may be liable for injuries if:may be liable for injuries if:

• owner negligently allows or causes owner negligently allows or causes them to commit the injurythem to commit the injury

• owner is aware that it is a vicious owner is aware that it is a vicious animal, and animal inflicts injury animal, and animal inflicts injury upon someone not acting upon someone not acting negligentlynegligently

• Animal Diseases: check state lawsAnimal Diseases: check state laws

Brands, Pollution, Brands, Pollution, ChemicalsChemicals• Brands: must have brand inspection Brands: must have brand inspection

to sell livestock or transport out of to sell livestock or transport out of statestate

• Livestock Pollution Laws: Livestock Pollution Laws: registration of farm with sanitation registration of farm with sanitation department may be requireddepartment may be required

• Agricultural Chemical Laws: must Agricultural Chemical Laws: must have permit to work with restricted have permit to work with restricted use chemicalsuse chemicals

What is a Riparian area?What is a Riparian area?

• Area along a stream bankArea along a stream bank

• owner of a stream bank may dam a stream owner of a stream bank may dam a stream as long as they do not:as long as they do not:– violate water right lawsviolate water right laws

– interfere with use of water by downstream interfere with use of water by downstream ownersowners

– divert the course of the streamdivert the course of the stream

– reduce the amount of water unreasonablyreduce the amount of water unreasonably

– cause water to back up on the land of those cause water to back up on the land of those above himabove him

What is surface water?What is surface water?

• Runoff from snow melt or rainRunoff from snow melt or rain

• Damming surface water at own riskDamming surface water at own risk

• Check water right lawsCheck water right laws

IrrigationIrrigation• A riparian owner is entitled to reasonable use of A riparian owner is entitled to reasonable use of

water for irrigationwater for irrigation

• You can get the right to take water by contract, You can get the right to take water by contract, license or by long continuous use of waterlicense or by long continuous use of water

• Generally, only riparian water can be used to Generally, only riparian water can be used to water land along that streamwater land along that stream

• Livestock come first.Livestock come first.

• Can form irrigation districtsCan form irrigation districts

• Permits requiredPermits required

• Water must be kept under controlWater must be kept under control

Domestic use of waterDomestic use of water

• household purposeshousehold purposes

• livestocklivestock

• irrigation less than two acresirrigation less than two acres

What is Estate Planning?What is Estate Planning?

• Preparing for financial security Preparing for financial security during retirement, the fair during retirement, the fair consideration of heirs, and the consideration of heirs, and the provisions for continuing the provisions for continuing the businessbusiness

• Wills, taxes, insurance, property, Wills, taxes, insurance, property, and trusts and carries out a person's and trusts and carries out a person's wishes for the disposition of wishes for the disposition of property at deathproperty at death

Factors to consider in estate Factors to consider in estate planningplanning• What are the objectives? (bills, college, What are the objectives? (bills, college,

taxes)taxes)

• Part of estate to provide for spousePart of estate to provide for spouse

• Plans that will work regardless of who dies Plans that will work regardless of who dies firstfirst

• Provisions that should be made in case the Provisions that should be made in case the surviving spouse should remarrysurviving spouse should remarry

• Retain an attorney for annual checkupsRetain an attorney for annual checkups

What are the types of What are the types of Property?Property?

• Real propertyReal property - land and - land and permanent improvementspermanent improvements

• Personal propertyPersonal property - tangible - tangible products (can see or touch), products (can see or touch), livestock, machinery, and intangible livestock, machinery, and intangible products (can't see or touch), bank products (can't see or touch), bank accounts, contracts, royaltiesaccounts, contracts, royalties

What is a Deed?What is a Deed?

• Documents that show what real Documents that show what real property is owned, who owns it, and property is owned, who owns it, and what method of ownership they what method of ownership they have.have.

Kinds of Deeds used in Kinds of Deeds used in conveying land ownershipconveying land ownership

• Warranty DeedWarranty Deed: the seller owns property : the seller owns property free and clear of legal claims such as liens free and clear of legal claims such as liens and mortgages except those claims and mortgages except those claims specifically mentioned in the deedspecifically mentioned in the deed

• the seller has the right to transfer the the seller has the right to transfer the propertyproperty

• the buyer will have quiet and peaceable the buyer will have quiet and peaceable possessionpossession

• the seller will defend the title if anyone the seller will defend the title if anyone lawfully challenges its legalitylawfully challenges its legality

Quit Claim DeedQuit Claim Deed

• the seller is only conveying the the seller is only conveying the seller's rights in the propertyseller's rights in the property

• seller does not promise he owns seller does not promise he owns anythinganything

• used to clear titles to property. All used to clear titles to property. All who have even a remote interest in who have even a remote interest in the property give up their interest the property give up their interest by signing a quit claim deed to one by signing a quit claim deed to one personperson

Transferring Legal Transferring Legal Ownership of PropertyOwnership of Property

• Laws of descentLaws of descent

• Contracts (required to sell land)Contracts (required to sell land)

• GiftsGifts

• Combined sale and giftCombined sale and gift

• WillsWills

• Co-ownershipCo-ownership

WillsWills• a Will is a legal statement of a persons wishes a Will is a legal statement of a persons wishes

concerning the disposal of property after deathconcerning the disposal of property after death

• a will must first be proven official and admitted a will must first be proven official and admitted to the courts. Because of this, those wishes to the courts. Because of this, those wishes should be carried out by a friend or relative should be carried out by a friend or relative (Executor)(Executor)

• wills have no force until the maker dieswills have no force until the maker dies

• must control only property owned by the must control only property owned by the maker of the willmaker of the will

• they do not become effective immediately they do not become effective immediately upon the death of the makerupon the death of the maker

Reasons for having willsReasons for having willsdistribute assets as you wishdistribute assets as you wish

reduce costs and time of settling the estatereduce costs and time of settling the estate

can name your own executorcan name your own executor

can name a guardian for minor childrencan name a guardian for minor children

can establish trust funds (the money or can establish trust funds (the money or property is left to an institution or person property is left to an institution or person who administers the property or money in who administers the property or money in accordance with the will)accordance with the will)

family can avoid internal conflict among its family can avoid internal conflict among its membersmembers

Consequences of dying Consequences of dying without a willwithout a will• state laws of descent decidestate laws of descent decide

• court appointed administratorcourt appointed administrator

• court appointed guardiancourt appointed guardian

• cost more to settle estatecost more to settle estate

What are estate taxes?What are estate taxes?

• taxes on property transferred upon taxes on property transferred upon deathdeath

Retirement planningRetirement planning

should have several sources of incomeshould have several sources of income

SavingsSavings

Employer sponsored pension plansEmployer sponsored pension plans

Annuity: yearly payment from an investment Annuity: yearly payment from an investment sumsum

Trusts: an owner transfers title to a trustee for Trusts: an owner transfers title to a trustee for the benefit of beneficiariesthe benefit of beneficiaries

Life Insurance: Investment type, may receive Life Insurance: Investment type, may receive an annuity, lump sum, or loanan annuity, lump sum, or loan

Retirement planningRetirement planning

Tax Sheltered retirement plansTax Sheltered retirement plans

Individual Retirement Accounts (IRA):Individual Retirement Accounts (IRA):

Keogh Plan: by self-employedKeogh Plan: by self-employed

Simplified Employee Pension Plan Simplified Employee Pension Plan (SEP): established by an employer to (SEP): established by an employer to make annual payments to an IRAmake annual payments to an IRA

Qualified Retirement Plan (QRP): by a Qualified Retirement Plan (QRP): by a corporation for employeescorporation for employees

Retirement planningRetirement planning

• Social Security: don't count on itSocial Security: don't count on it

• Rental or lease farm propertyRental or lease farm property

• Sale of the farmSale of the farm

• US Savings BondsUS Savings Bonds

• Commercial Stocks and BondsCommercial Stocks and Bonds

• US Treasury BillsUS Treasury Bills

Retirement planningRetirement planning

• Nonfarm investmentsNonfarm investments

• Certificates of DepositCertificates of Deposit

• School BondsSchool Bonds

• Municipal BondsMunicipal Bonds

Chapter SummaryChapter Summary

• Remember: when in doubt, consult Remember: when in doubt, consult a qualified attorneya qualified attorney