Recent Blog Posts | Farm Office (2024)

The fall hunting season is upon us, and landowners across Ohio are being asked to give permission to allow hunting on their land. That means now is a good time for a refresher on the laws that affect Ohio landowners and hunting. Here are ten legal tips for landowners considering hunting activities on their land.

1. Ohio law requires permission in writing--but landowners should review the permission form and know who they’ve permitted. Ohio law requires a hunter to obtain a hunting license and written permission from a landowner or the landowner’s agent before hunting on private lands or waters. Landowners should expect to be asked to sign the permission form provided by ODNR, which is available on ODNR’s website. The permission form allows a landowner to designate a permission period—either the entire hunting season or specific dates. If a hunter uses a different permission form, it might contain additional provisions beyond the permission to hunt, such as the right to install a tree stand or a blind on the property. Landowners should have an attorney review a form if unsure of its meaning and should document names and contact information for hunters granted permission to hunt on the property. Contact information will be helpful if there is a hunting incident or a need to contact the hunter.
2. Know the laws for family members and tenants. A landowner who is a resident of Ohio, the landowner’s spouse, all children of any age, and all grandchildren under the age of 18 are exempt from the hunting license requirement when hunting on the landowner’s land. All other family members must obtain a hunting license and follow the written permission requirement. When a landowner is not an Ohio resident, only the landowner, spouse, and children living with the landowner may hunt without a license, and only if the landowner’s state of residency grants the same rights to Ohioans who own land in that state. In a rental situation where a tenant resides on the land, the tenant and the tenant’s children who live on the land may hunt on the property without a hunting license and written permission.
3. The hunting license exemption also applies to certain entities. If the owner of land is a limited liability company or a limited liability partnership with three or fewer individual members or partners, a member or partner who is a resident of Ohio may hunt on the land without a hunting license, as can the member or partner's children of any age and grandchildren under the age of 18. If a trust owns the land and has a total of three or fewer trustees and beneficiaries, a trustee or beneficiary who is an Ohio resident and their children of any age and grandchildren under the age of 18 may hunt on the land without a hunting license.
4. A hunter must also have written permission to pursue or retrieve an injured animal. Hunters often mistakenly believe they have the right to pursue an injured animal onto another property, but Ohio law says otherwise. Written permission of a landowner is required for each of these hunting activities: shooting, shooting at, catching, killing, injuring, or pursuing a wild animal or bird. Contrary to popular belief, the law does not require a landowner to give a hunter permission to pursue an injured animal—it’s a choice a landowner can make.
5. Two Ohio laws can protect landowners from liability for hunting injuries. The first is Ohio’s Recreational User Statute, which states that a landowner has no legal duty to keep the premises safe for a hunter and other recreational users who have permission to be on the land. This means the law will protect a landowner from liability if a hunter is harmed while on the property, but it won’t protect a landowner who caused the harm through intentional or reckless conduct. Note that the liability protection does not apply if a landowner charges a hunter a fee for hunting, unless the fee is a payment made under a hunting lease. Read more about the Recreational User’s Statute in our law bulletin on farmoffice.osu.edu. A second Ohio law addresses liability for someone who is hunting on land without permission. In that case, Ohio law states a landowner is not liable for “injury, death, or loss to person or property” that arises from a violation of the requirement to have a landowner’s permission to hunt on the land.
6. Be mindful of the number of hunters who could be on the land. For safety purposes, a landowner should be careful about allowing multiple hunters onto the land at the same time. Strategies for managing multiple hunters include designating a specific parking area so hunters know if another hunter is present and setting specific hunting periods for different hunters. Taking reasonable steps to manage multiple hunters will help ensure that someone isn’t harmed, and it can also protect a landowner from a potential claim that the Recreational User’s Statute shouldn’t apply because the landowner behaved recklessly by not managing multiple hunters allowed on the land. While such a claim might not be legally successful, it would require landowners and their insurance providers to prove that the Recreational User’s Statute protects the landowner from liability.
7. Consider a hunting lease. Many hunters and hunting groups prefer to secure hunting rights through a hunting lease. A lease can provide a landowner with additional income and is one situation where the liability protection of Ohio’s Recreational User Statute applies even if a payment is made to the landowner. A lease can also address other rights and responsibilities, such as number and gender of animals to be taken, placement of tree stands and blinds, use of feeders and bait, where animals may be cleaned, and property maintenance activities by hunters. See our law bulletin on hunting lease considerations in the property law library on farmoffice.osu.edu at https://farmoffice.osu.edu/our-library/property-law.
8. Ohio laws address harm to property caused by hunters. What if a landowner gives permission to a hunter, but then that hunter causes property damage? Ohio’s hunting law is one law that can help. It prohibits a hunter from acting in a “negligent, careless or reckless manner so as to injure persons or property.” A hunter who violates this law can face first degree misdemeanor charges and revocation of the hunting license and must also pay compensation to the harmed landowner. Ohio’s reckless destruction of vegetation law is a second helpful law. It allows a landowner to seek compensation for “reckless” destruction of vegetation, trees, and crops and would address a situation where a hunter acted intentionally and without regard for the consequences. Intentionally cutting down a tree without permission or running an ATV through a planted crop are behaviors that could be deemed reckless. Under this law, a landowner could receive triple the amount of the harm caused to the property by a hunter’s reckless behavior.
9. It’s a good time to mark property boundaries. Many of the old fences that marked a farm’s property boundaries in Ohio are long gone, and it’s not as easy today for hunters to know where one farm begins and another ends. Especially for landowners who don’t want hunting on their land, be sure boundary lines are clear to hunters. Use corner posts, fences, and “no trespassing signs.” In woodlots, marking the trees on the boundary with paint is also helpful. For an overview of woodlot boundary marking, refer to this video from OSU Extension at https://www.youtube.com/watch?v=zSYYn_onE80.
10. Ohio has a process for dealing with poachers and trespassers. Ohio’s “Turn in a Poacher” program (TIP) establishes mechanisms for reporting a violation of wildlife laws, such as hunting without permission or a license and taking animals out of season. A person can report a violation using an online reporting form on ODNR’s website or by calling the TIP hotline at 1-800-POACHER (762-2437). Incident reporters are encouraged to share details such as what happened, the location, vehicle description and license plate, and descriptions of suspects. All information submitted to TIP is confidential, and reporters may choose whether or not they are willing to speak with a wildlife officer about the incident.

Posted In: Property
Tags: hunting, recreational users statute
Comments: 0

One of the biggest risks to the continuation of family farms is potential Long-Term Care (LTC) costs. On average, about two-thirds of us will need some type of LTC during our lives. The average nursing home in Ohio costs around $100,000/year. A few years in a nursing home can put severe strain on the finances of a farming operation.

There are several strategies that can be implemented to help reduce the threat of LTC costs on farming operations. However, a risk assessment must be completed before it can be determined which strategy is best. For example, a farming operation with significant income and financial resources may have low risk to LTC costs and thus may not need aggressive planning. A farming operation with limited income and financial resources may need aggressive planning to help protect farm assets.

To help with the LTC risk assessment, the OSU Agricultural and Resource Law Program has developed a calculator to help determine LTC risks to farm assets. The calculator determines the assets that will be depleted if LTC costs are incurred. Income, LTC costs and the assets owned by a farmer are all factored into the analysis.

After using the calculator and analyzing the risk of LTC costs to farm assets, a decision can be made as to the appropriate LTC strategy to implement. Deciding upon a strategy before assessing LTC risks can lead to overly aggressive planning or leaving farm assets unnecessarily exposed. A risk analysis is the best way to ensure that the proper LTC strategy is implemented for each specific farming operation.

The Long-Term Care Risk Calculator is available at https://farmoffice.osu.edu/law-library/estate-transition-planning. The calculator includes a video explaining how to use the calculator and how to interpret the results. For information on LTC costs and their impact on farming operations, see the Long-Term Care and the Farm publication available at farmoffice.osu.edu.

Posted In: Estate and Transition Planning
Tags:
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The OSU Extension Farm Office Team returns for another Farm Office Live webinar on Friday, November 17 from 10:00 to 11:30 a.m.

Join us to hear from our agricultural law and farm management specialist. This month's webinar will feature the following topics:

• Ohio’s role in organic grain production – Eric Richer, OSU Extension Field Specialist, Farm Management
• Using Charitable Remainder Trusts – Robert Moore, Attorney and Research Specialist, OSU Agricultural and Resource Law Program
• Agronomy and Farm Management Podcast – Josh Winters, OSU Extension Educator and Bruce Clevenger,OSU Extension Field Specialist, Farm Management
• Farm Business Analysis -- Clint Schroeder, Program Manager, OSU Extension Farm Business Analysis Program
• Farmer Mental Health Concerns and Resources -- Bridget Britton, Behavioral Health Field Specialist, Agriculture and Natural Resources
• Foreign Ownership of Farmland – Panel discussion -- Peggy Hall (Attorney and Director, OSU Agricultural & Resource Law Program) with Micah Brown (Attorney with National Agricultural Law Center)

To register for the webinar or to access replays of our previous programs, visit go.osu.edu/farmofficelive.

Featuring the work of Carolyn C. Jolly, Law Fellow, National Agricultural Law Center

OSU’s Agricultural & Resource Law Program is fortunate to be a partner with the National Agricultural Law Center, which includes working with the Center’s Law Fellows—students currently studying law in different law schools across the country. Carolyn C. Jolly is one of our current Law Fellows, and she has an interest in environmental laws that affect agriculture. Carolyn is the author of today’s blog. She has assembled a harvest of environmental updates affecting agriculture that include approval of Ohio EPA’s phosphorus TMDL, a practical ESA guide for producers, EPA’s commitment to adhering to its ESA requirements, and an update on participation by agricultural producers in voluntary carbon markets.

EPA Approves Ohio’s Maumee Watershed Nutrient Total Maximum Daily Load

In 2014, phosphorous runoff from farms in the western basin of Lake Erie caused an algal bloom. Harmful algal blooms produce toxins that impair drinking water, affect aquatic life, and hinder recreational use. Coming up with a solution to reduce the phosphorus runoff has been contentious. In 2019, Toledo voters passed a bill that would allow citizens to sue farmers on behalf of the lake. This measure was held to be unconstitutional, but it could have greatly impacted the ability of farmers and producers to continue their operations. To address specific pollutants, the Clean Water Act requires states to develop Total Maximum Dailey Loads (TMDL). Environmental interests and local governments in Ohio legally challenged both the Ohio EPA and U.S. EPA to establish a TMDL for the western Lake Erie Basin. In June of 2023, the Ohio EPA did submit a proposed TMDL for to the EPA and it was approved in September. The aim of the TMDL is to reduce phosphorus runoff in the Maumee Watershed.

Here are some of the approaches for agricultural areas the EPA included in the TMDL:

Nutrient Management

• Soil testing and nutrient management planning efforts (e.g., Voluntary Nutrient Management Plans via H2Ohio funding)
• Variable rate fertilization and subsurface placement of fertilizer (e.g., following the ‘4 R’s’ of nutrient management: using the right nutrient at the right rate and right time in the right place)
• Manure incorporation (mixing manure into soils or placing the manure below the soil surface)

Erosion Management

• Conservation crop rotation and cover crops (e.g., improving soil health, increasing soil organic matter, improving soil moisture storage capacity, etc.)

Agricultural Water Quantity Management

• Drainage water management (e.g., management of discharge from agricultural tile drainage lines to store water in the water table beneath fields and reduce discharge to surface waters)
• Edge-of-field buffers (e.g., planting in riparian areas to increase water storage and decrease nutrient and sediment inputs, Great Lakes Restoration Initiative)
• Two-stage ditch deployment (e.g., modifying the profile of stream channel bottoms by constructing a bench/floodplain adjacent to the existing stream channel to slow water flow during high flow events and trap nutrients and sediment)
• Wetland restoration and preservation (e.g., the restoration/protection of existing wetlands are beneficial for storing water and nutrients on the landscape, Environmental Quality Incentives Program; Western Lake Erie Basin Project - Ohio)

Read the Final TMDL on the Ohio EPA’s webpage for the Maumee Watershed.

Agricultural Producers Now have a Practical Guide to the Endangered Species Act

The Endangered Species Act (ESA) is intended to protect endangered and threatened species and thus has an impact on agriculture and land use across the country. However, being such a wide-ranging piece of legislation, it can be difficult to understand the law and its full impact on agriculture. Brigit Rollins, an attorney with our partner, the National Agricultural Law Center, set out to answer how and why the ESA affects agriculture and land use by creating the Endangered Species Act Manual: A Practical Guide to the ESA for Agricultural Producers. It is a concise guide that describes the history of the ESA, influential case law, regulatory changes, and specifics of the ESA’s impact on agriculture. Additionally, it is meant to be a living document that will be updated with current changes and issues.

EPA on Balancing ESA Requirements and Responsible Pesticide Use

When registering new uses for pesticides and reviewing already registered uses, the Environmental Protection Agency (EPA) is required to consult the Endangered Species Act (ESA) to ensure that the use follows ESA standards. This can be a lengthy process and the EPA has complied with the process in less than 5% of its actions. This noncompliance has resulted in substantial litigation. To address these issues, EPA issued its ESA Workplan. EPA actions in the workplan include developing mitigation measures for particularly vulnerable species, developing and implementing strategies to identity mitigation measures for the different classes of pesticides, completion of ESA work for eight organophosphates and four rodenticides, and hosting a workshop with stakeholders to explore other methods of offsetting pesticide impacts. EPA also released its Draft Herbicide Strategy for comment and the Rodenticide, Insecticide, and Fungicide Strategies are under development. The EPA has also released its ESA guidance for future registrations.

Agricultural Producer Participation in Carbon Markets

To mitigate climate change, Congress passed the Growing Climate Solutions Act (GCSA) to improve access to carbon markets for agricultural producers. In accordance with the law’s requirements, the U.S Department of Agriculture (USDA) released A General Assessment of the Role of Agriculture and Forestry in the U.S. Carbon Markets on October 23, 2023. The report addresses participation by agricultural producers in the carbon market, barriers to and concerns or participation, and ways to improve producer participation. The report notes that even though producers are aware of the carbon market, voluntary participation has been low. According to the report, “Producers cite the concerns about the return on investment, upfront costs, data collection burdens, compensation for pre-existing practices, permanence requirements, issues of scale, and confusion about carbon markets and programs as key factors in their evaluation into whether to participate in a carbon project.” The USDA concludes that to reduce barriers to participation, strategies need to be implemented to “reduce transaction costs, minimize record-keeping burdens, address early-adopter and permanence requirement concerns, and address barriers related to project scale.” The report also details the USDA’s role in improving participation through outreach and education, offering grants and partnerships, supporting carbon market infrastructure, and investing in measurement, monitoring, reporting, and verification of carbon credit procedures.

Posted In: Environmental
Tags: Lake Erie, Maumee Watershed, tmdl, Ohio EPA, agricultural nutrients, endangered species act, pesticides, carbon markets
Comments: 0

The State of Arkansas made history last month when it took steps to enforce its new law restricting foreign ownership of land in the state. Arkansas ordered Northrup King Seed Co., a subsidiary of Syngenta held by China-owned company ChemChina, to give up 160 acres of Arkansas farmland it owned. The State also assessed a $280,000 fine against Syngenta for failing to disclose the land ownership. The actions are the result of a new foreign ownership law enacted by the Arkansas legislature earlier this year.

Joining Arkansas and ten other states, Ohio also passed a law restricting foreign ownership of land earlier in 2023. Ohio’s new “Save our Farmland and Protect our National Security Act” quietly became effective last month. The law limits who can own agricultural land in the state and requires persons or entities who cannot own Ohio farmland to forfeit title to the property, which the State will then sell. The purpose of the law, according to the legislature, is “to recognize that Ohio has substantial and compelling interests in protecting its agricultural production.”

Who the law restricts from owning agricultural land in Ohio

The law is not an absolute restriction on foreign ownership of land. Instead, the law prohibits agricultural land ownership by any “person” listed on a registry compiled by Ohio’s Secretary of State. A “person” can include an individual, firm, company, trust, business or commercial entity, organization, joint venture, non-profit, or non-U.S. government. The prohibition applies not just to the person listed on the registry, but also to any agent, trustee, or fiduciary of the person.

The Ohio Secretary of State must compile the “registry” by identifying and including any person that constitutes a threat to the agricultural production of the state. To develop the registry, the Secretary of State must consult several federal sources, including the list of foreign adversaries, terrorist exclusion list, list of countries that have provided support for acts of international terrorism, and persons designated by two presidential Executive Orders. In accordance with the law, Ohio’s Secretary of State has compiled the registry and published it online at https://www.ohiosos.gov/publicintegrity/save-our-farmland/.

Exceptions to the ownership restrictions

The ownership restriction does not apply to any agricultural land a person acquired before the act’s effective date of October 3, 2023. There is also a limited exception that applies when a person on the registry recieves the land through inheritance, a gift, collection of a debt, a foreclosure, or enforcement of a lien on or after the law's effective date. In those cases, the person can recieve the land but must divest itself of the title and any interest in the land within two years of receiving it. And while holding the land until divestiture, the person cannot use it for any purpose other than agriculture or lease it to any person on the registry.

Enforcement of the law

Enforcement involves both the Secretary of State and the Ohio Attorney General. If the Secretary of State finds that a person listed on the registry has acquired title or an interest in land in violation of the law, the Secretary of State must report the violation to the Attorney General. Others can report land ownership by a person on the registry via the Secretary of State’s web page for the registry, https://www.ohiosos.gov/publicintegrity/save-our-farmland/.

Upon learning of the violation, the Attorney General must initiate a legal action in the county where the land is located. If the court agrees that the ownership violates the law, it shall file an order allowing the state to take ownership of the land and ordering the land to be sold at public auction, following required legal procedures. Proceeds from the sale are to be applied first to any court costs and expenses, then to the registered person. That amount is limited, however, to the actual cost paid by the registered person for the land. If any sale proceeds remain, the funds are to be paid to the general fund of each county where the land is located, proportionate to the acreage in the county.

Learn more on our next Farm Office Live!

Join us on our next Farm Office Live webinar as we discuss Ohio’s new foreign ownership law and talk with Micah Brown, staff attorney with the National Agricultural Law Center, about foreign ownership restrictions in the U.S. and what they mean for agriculture. The Farm Office team will also cover Using Charitable Remainder Trusts, Ohio’s Role in Organic Grain Production, Farm Business Analysis Update, and Farmer Mental Health Concerns and Resources. Farm Office Live takes place on November 17 at 10 a.m.-- registration is necessary at https://farmoffice.osu.edu/farmofficelive.

Read the primary provisions of Ohio’s Save Our Farmland and Protect Our National Security Act in Ohio Revised Code Section 5301.256. The Ohio Legislature enacted the law in House Bill 33, the biennial budget bill.

Posted In: Business and Financial, Property
Tags: foreign land ownership, save our farmland and protect our national security act, foreign land restriction
Comments: 0

A common question regarding farm transition planning is: “should I have a will or trust for my plan?” Like most legal questions, the answer is “it depends”. Sometimes a will is adequate for a plan while other plans should include a trust. Knowing which you need requires an understanding of wills and trusts and the factors that should be considered when deciding which to implement.

A new publication, Is a Will or Trust Better for Your Farm Transition Plan?, discusses the differences between wills and trusts and provides nine factors to consider when deciding which to use for your plan. The factors to consider are:

1. Legal fees
2. Complexity of the plan
3. Probate
4. Concerns about heirs
5. Second marriages
6. Transition of farming operation
7. Taxes
8. Privacy
9. Control

The publication analyzes each factor and how it relates to a will and trust. After reviewing the factors, an informed decision can be made regarding implementing a will or trust into a farm transition plan. This publication is part of an extensive library of farm transition bulletins and publications available at farmoffice.osu.edu.

Posted In: Estate and Transition Planning
Tags: wills, trusts
Comments: 0

If you and your family are grappling with the critical issue of how to transition the farm operation and farm assets to the next generation, we can help. Attend one of our “Planning for the Future of Your Farm”workshops this fall and winter to learn about the communication and legal strategies that provide solutions for dealing with farm transition needs and decisionmaking. We've scheduled both a webinar version and several in-person options for the workshop, with the first in-person workshops coming up soon--November 29, 2023 in Mt. Orab and December 7 in Celina.

This workshop challenges farm families to actively plan for the future of the farm business. Learn how to have crucial conversations about the future of your farm and gain a better understanding of the strategies and tools that can help you transfer your farm’s ownership, management, and assets to the next generation. We encourage parents, children, and grandchildren to attend together to develop a plan for the future of the family and farm.

Teaching faculty for the workshop are David Marrison, OSU Extension Farm Management Field Specialist, and Robert Moore, Attorney with the OSU Agricultural & Resource Law Program. Topics David and Robert will cover in the workshop include:

• Developing goals for estate and transition planning
• Planning for the transition of control
• Planning for the unexpected
• Communication and conflict management during farm transfer
• Federal estate tax challenges
• Tools for transferring assets
• Tools for avoiding probate
• The role of wills and trusts
• Using LLCs
• Strategies for on-farm and off-farm heirs
• Strategies for protecting the farmland
• Developing your team
• Getting your affairs in order
• Selecting an attorney

Webinar version. You and your family members can attend the workshop individually from the comfort of your homes. The four-part webinar series will be February 5, 12, 19, and 26, 2024, from 6:30 to 8:30 p.m. via Zoom.

In-person workshops. Our local Extension Educators are hosting in-person workshops at five regional locations across Ohio:

• November 29, 2023 - Brown County - Mt. Orab
• December 7, 2023 - Mercer County - Celina
• January 19, 2024 - Columbiana County - Lisbon
• January 26, 2024 - Champaign County - Urbana
• February 2, 2024 - Seneca County - Tiffin
• April 4, 2024 - Warren County - Lebanon

Registration is required. Find registration information for all workshops at https://farmoffice.osu.edu/farm-transition-planning.

We hope you'll join us to move forward on planning for the future of your farm! For questions about the workshop, please contact David Marrison at marrison.2@osu.edu or 740-722-6073.

Posted In: Estate and Transition Planning
Tags: transition planning, Estate Planning, succession planning, planning for the future of your farm
Comments: 0

One of the primary challenges for a retiring farmer is the large tax burden that retirement may cause. Throughout their farming careers, farmers do a good job of managing income taxes, in part, by delaying sales and prepaying expenses. This strategy works well while the farm is operating but can cause significant tax liability upon retirement. The combination of a large increase in revenue from the sale of assets and little or no expenses to offset the revenue can cause a retiring farmer to be pushed into high tax brackets. It is not unusual for 40% or more of the sale proceeds from a retirement sale to go to taxes. One strategy to reduce income tax liability at retirement is a Charitable Remainder Trust (CRT). A CRT can be an effective way of managing income taxes at retirement, but it is not for everyone.

A CRT is a charitable trust because at least some of the assets in the CRT must eventually pass to a qualified U.S. charitable organization such as a church or 501(c)(3) corporation. This charitable nature of the CRT is central to the CRT strategy. As a charitable trust, the CRT may sell assets without paying tax on the sale. So, instead of the retiring farmer selling assets in their own name, they donate the assets to the CRT and then the CRT sells the assets. The retiring farmer then receives an income stream from the CRT. After a period of time, the income stream stops and the remaining trust assets are contributed to the named charity. The following are the steps of the CRT strategy:

1. Assemble a team of advisors and develop a CRT strategy.
2. Donor establishes a CRT. The trust document declares the income beneficiaries and the charitable beneficiaries.
3. Donor determines the assets to be contributed to the CRT.
4. Donor contributes assets into the CRT, typically grain, machinery and/or livestock.
5. The CRT sells the assets but does not pay tax.
6. The Trustee of the CRT uses the sale proceeds to establish an annuity. The annuity must be designed to provide at least 10% of the sale proceeds to the charity.
7. The annuity pays out to the Donor over a number of years. The Donor pays income tax on the annuity distributions.
8. When the trust is terminated, the charity is paid the remaining assets.

Consider the following example to help further explain how a CRT strategy works:

Farmer decides to retire at the end of the 2023 crop year. After harvesting the 2023 crop, Farmer owns $1 million of grain and $1.5 million of farm equipment. Farmer’s accountant tells him that if he sells all the grain and machinery in one year, he will pay around $1 million in taxes. Farmer decides to implement the CRT strategy. He establishes a CRT and names himself and his spouse as the income beneficiaries and the local children’s hospital as the charitable beneficiary. Farmer transfers his grain and machinery into the CRT. The CRT sells the grain and machinery and receives $2.5 million in sale proceeds.

The CRT establishes an annuity that will pay out $125,000 for the next 20 years. Farmer pays income tax on each $125,000 payment which results in $20,000 of annual income taxes. After 20 years, the trust is terminated, and the children’s hospital receives the remaining funds in the CRT.

As the example shows, the strategy avoids a large, up-front tax payment in the year of the asset sale. Farmer pays taxes on each annual $125,000 payment which allows him to stay in a lower tax bracket. In the example, instead of paying $1 million in taxes in 2023, Farmer spreads the payments out and ultimately pays $400,000 over 20 years.

The primary disadvantage of a CRT is that it is an irrevocable trust. Once the CRT is set into motion, it cannot generally be undone. A CRT may not be the best option for farmers who wish to keep flexibility with managing their assets or who are transitioning the farming operation to family members. While a CRT provides many tax and business benefits, it is not an adaptable plan that can be changed in the future.

Another disadvantage of a CRT is the cost. It is usually a rather complicated process to establish the trust, calculate the potential tax savings, file a tax return, and establish an annuity. Legal and other professional fees will often be tens of thousands of dollars. It is important early in the planning process to weigh the potential tax savings against the cost of establishing the CRT.

For more information on CRTs, see the newly published bulletin Charitable Remainder Trusts as a Retirement Strategy for Farmers available at farmoffice.osu.edu. This bulleting provides details on how a CRT strategy is implemented and its advantages and disadvantages. Be sure to consult with an attorney, tax advisor and financial advisor before deciding on a CRT for your retirement strategy.

Posted In: Business and Financial, Estate and Transition Planning
Tags: retirement, Estate Planning, farm transition planning, charitable remainder trust, trust, CRT
Comments: 0

Agricultural & Natural Resources Income Tax Issues Webinar
Barry Ward, Director, Income Tax Schools at The Ohio State University
Jeff Lewis, Income Tax Schools at The Ohio State University

Tax practitioners, farmers, and farmland owners are encouraged to connect to the Agricultural and Natural Resources Income Tax Issues Webinar (via Zoom) on December 13 from 8:45 a.m. to 3:20 p.m. The event is sponsored by Income Tax Schools at The Ohio State University.

The webinar focuses on issues specific to farm tax returns related to agriculture and natural resources and will highlight timely topics and new regulations.

The program is an intermediate-level course for tax preparers whose clients include farmers and rural landowners. Farmers who prepare and file their own taxes will also benefit from the webinar.

Tentative topics to be covered during the Ag Tax Issues webinar include:

• Timely Tax Issues Facing Agricultural Producers
  • Employee vs Independent Contractor
  • Cost-Sharing Exclusion
  • Farm Trade or Business
  • Farming S Corporations
  • Timber Taxation
• Legislative and Regulatory Update
• Form 1099s Requirements for Farmers and Ranchers
• Tax Schemes Targeting the Farm
• Tax Issues Arriving at the Death of a Farmer
• Ohio Tax Update

Other chapters included in the workbook not included in the webinar includes: Material Participation Rules for Farmers, Ranchers and Landowners, Livestock Tax Issues, Depreciating and Expensing Farm Assets, Sale and Exchange of Farm Property, Sample Tax Return.

The cost for the one-day school is $180 if registered by November 29th. After November 29th, the registration increases to $230. Additionally, the course has been approved for the following continuing education credits:

•Accountancy Board of Ohio, CPAs (6 hours)

•Office of Professional Responsibility, IRS (6 hours)

•Supreme Court of Ohio, Attorneys (5 hours)

Registration includes the Agricultural Tax Issues Workbook. Early registration (at least two weeks prior to the webinar) guarantees that you’ll receive a workbook prior to the webinar.

The live webinar will also feature options for interaction and the ability to ask questions about the presented material.

More information on the workshop, including how to register, can be found at:https://farmoffice.osu.edu/tax/2023-ag-tax-issues-webinar

Contact Barry Ward at ward.8@osu.edu or Jeff Lewis at lewis.1459@osu.edu

Posted In: Business and Financial, Labor, Legal Education, Tax
Tags: tax, Ag Tax, Farm Tax, labor law, tax law, Farm Business
Comments: 0

An agricultural easem*nt is a legal instrument that can protect farmland from non-farm development and preserve the legacy of family land for the future. An earlier blog post explains how an agricultural easem*nt works and answers common questions about agricultural easem*nts. As we explained, an agricultural easem*nt not only preserves farmland but can also be a valuable financial and tax tool that can enable a transition of the farm to the next generation. But are there drawbacks to agricultural easem*nts? Here's a summary of potential negative implications of easem*nts that landowners should also consider.

It's difficult to forecast the future of a farm. The very nature of the easem*nt requires a best estimate of how the farmland might be used for agriculture into the future--a challenging task. The Deed of Agricultural Easem*nt the parties agree to must predict agricultural activities that are consistent with the easem*nt and those that would violate the easem*nt. There could be future problems if the predictions and forecasting aren’t flexible enough to accommodate agriculture in the future.

The “perpetuity” requirement. While it’s possible to draft an easem*nt that lasts only for a certain term of years, most agricultural easem*nts remain on the land “in perpetuity,” or permanently. The programs that pay a landowner to grant an agricultural easem*nt and the federal income and estate tax benefits for donating all or part of an easem*nt require that the easem*nt is perpetual. This differs from the conservation programs we’re accustomed to in agriculture that require shorter term commitments, and it can be a deterrent to a landowner who wants future generations to have a say in what happens to the land. These concerns might be addressed in the deed of agricultural easem*nt, however, which may provide sufficient flexibility to address those future concerns.

Termination can be difficult and costly. Hand in hand with the perpetuity issue is the difficulty of terminating an agricultural easem*nt once it’s in place. Typically, both parties must agree on a termination and a court of law must determine that conditions on or surrounding the land make it impossible or impractical to continue to use the land for agricultural purposes. Attempts to terminate without following the stated procedures can result in penalties for the current landowner. If there was a payment for the agricultural easem*nt, a deed of easem*nt will likely require the landowner to reimburse the paying party for the proportionate share of the fair market value of the land with the easem*nt removed and will also require the party receiving the reimbursem*nt to use the funds only for similar conservation purposes.

Eminent domain can be an issue. As one Ohio farm family has learned, an agricultural easem*nt might not protect the farmland from an eminent domain proceeding. In Columbia Gas v. Bailey, 2023-Ohio-1245, the Bailey family was forced to litigate an attempt by Columbia Gas to use eminent domain for the construction of a gas pipeline across their farmland. Their predecessor had placed an agricultural easem*nt on the farmland in 2003, and the family argued the easem*nt prevented the taking of land for the pipeline under the doctrine of “prior public use.” That doctrine prohibits an eminent domain action that would destroy a prior public use. The court agreed that the agricultural easem*nt did create a prior public use on the land, and the court shifted the burden to Columbia Gas to prove that the pipeline would not destroy the established prior public use. Rather than doing so, Columbia Gas withdrew its eminent domain proceeding and moved the location of the pipeline. The court's decision to recognize an agricultural easem*nt as a prior public use might provide some protection from eminent domain for future owners of agricultural easem*nt land but, like the Baileys, landowners may have to fight a long, expensive battle to prove that an eminent domain action would destroy an established prior public use.

Lenders and other interests must be on board. A landowner must deal with any existing mortgages, liens, leases, or easem*nts on the farmland before entering into an agricultural easem*nt. The State of Ohio’s agricultural easem*nt, for example, requires a lender to subordinate a mortgage to the rights of the easem*nt holder. Renegotiation of the mortgage might be necessary, and the lender might require a paydown of the outstanding mortgage if the property’s value could reduce below that amount. Without subordination and other approvals, a landowner will not be able to enter into an agricultural easem*nt.

Local governments must be on board. Ohio’s program for purchasing agricultural easem*nts requires a landowner to submit a resolution of support from the township and county where the land is located. This means the local governments must agree that committing the land to agriculture is consistent with local land use plans. An early conversation with local officials is necessary to ensuring consistency with the community’s future plans.

There will be monitoring. An easem*nt holder has the responsibility of ensuring there is not a violation of the easem*nt or conversion of the land to non-agricultural uses. This means there will be a baseline or “present condition” report of the easem*nt property upon easem*nt creation and monitoring of the property “in perpetuity.” An annual visit to the property and completion of an annual monitoring report by the easem*nt holder is common.

It's a lengthy process. Agricultural easem*nts don’t pop up overnight. Especially when applying for funding from competitive programs like Ohio’s Local Agricultural Easem*nt Purchase Program or the NRCS Agricultural Land Easem*nts Program, it can be a year or more before an agricultural easem*nt is in place.

Planning and integration with plans is necessary. An agricultural easem*nt is one piece of what can be a complex plan addressing a landowner’s expansion, retirement, estate, and transition needs. A landowner would be wise to work with a team of professionals—financial planner, tax professional, attorney—to ensure that an agricultural easem*nt integrates with all other parts of the plan.

Still interested? Ohio landowners interested in learning more about agricultural easem*nts may want to consider these steps:

• Review the resources on the Ohio Department of Agriculture’s Office of Farmland Preservation.
• Talk with other landowners who have entered into easem*nts. Refer to the Coalition of Ohio Land Trusts landowner resources and landowner stories.
• Visit American Farmland Trust’s Farmland Information Center.
• Talk with a “local sponsor” or land trust in your area. The Office of Farmland Preservation provides a list of local sponsors for the Clean Ohio Agricultural Easem*nt Purchase Program on its website.
• Talk with your attorney, financial planner, and accountant about the implications of entering into an agricultural easem*nt.

Posted In: Business and Financial, Conservation Programs, Environmental, Estate and Transition Planning, Property
Tags: agricultural easem*nt, farmland preservation, farmland protection, conservation easem*nt, Clean Ohio
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