Monthly Archives: September 2013

Center for Ag Law and Tax Conference – Day 2

In continuation of our coverage of the Center for Agricultural Law and Taxation’s (“CALT”) Seminars on Ag Law and Estate Planning, here are some of the big topics discussed on the second day:

  • Prof. Roger McEowen started the group off with a review of some of the major changes made with the American Taxpayer Relief Act (“ATRA”) of 2012. The Act provided some certainty and permanence of key provisions, like the estate tax exemption of at least $5 million in a transfer of an estate’s assets. Additionally, the exemption is now indexed to account for yearly inflation. ATRA also continued the unification of the estate and gift tax rates and exemption amounts. Finally, portability was continued, which allows a widow or widower to use their deceased spouse’s unused estate tax exemption.
  • The Bar Association’s IRS insider, Kristy Maitre, discussed several procedural items of note for tax preparers to focus on for the upcoming season.
  • Judge Elizabeth Crewson Paris of the U.S. Tax Court spoke about the history, purpose, and practices of the U.S. Tax Court. There are currently 17 tax judges (and 11 retired judges on recall) who hear and decide disputes taxpayers have with IRS notices of deficiency or determination. Each year, thousands of cases are filed in hopes of the court agreeing with their take opposing some IRS action.
  • Attorney Kyle Irvin of Sioux City gave a presentation on several issues a fiduciary (i.e., a person who has a special duty of trust and responsibility to another person) can face in carrying out their duties. In trust situations, a fiduciary (“trustee”) has several very important duties, including making a sufficient, accurate accounting of all the trust’s assets. If you are the trustee of someone’s trust, it is strongly recommended you keep some sort of updated, detailed spreadsheet recording all of the deposits, withdraws, purchases, and sales of the trust property, money, and investments.
  • Attorney David Repp of Des Moines discussed the recent case of Baur v. Baur Farms, a recent decision from the Iowa Supreme Court. The case involved a farm family that set up a corporation. One of the relatives, a minority shareholder in the farm corporation, sued the majority shareholder and manager. The Supreme Court determined that although the majority shareholder didn’t commit abuse, waste, mismanagement, or engage in self-dealing, the minority shareholder was still owed satisfaction of his ‘reasonable expectations’ from the majority shareholders. These reasonable expectations include sharing “proportionally in a corporation’s gains,” which can apply to distributions and the minority’s demand to sell shares back to the company for fair value. Using a reasonable expectations standards could allow a majority shareholder who was acting in good faith to be found by a court as acting oppressively. The ramifications of the holding and standard for Iowa business law will be played out in the future, but it seems safe to say that the traditional rule of the court deferring to a business’ own judgment has been reduced in some measure and, as Mr. Repp put it, “minority shareholders have gained significant bargaining power in negotiating their exit.”
  • Des Moines attorney Margaret van Houten discussed the chilling and tragic case of Iowa v. Rodney Lee Bean, which came out of an appellate court in Iowa this month. Mr. Bean was the power of attorney for an elderly couple in Washington County, Iowa. Some of the terrible acts or failures Mr. Bean did in this capacity included shutting up the elderly woman into his home, neglecting to get her medical attention and medicine for her health problems and broken bones (we can only guess as to how she got those), and stealing her money. Mr. Bean was convicted of involuntary manslaughter, second-degree theft, neglect of a dependent person, and dependent adult abuse. Financial, mental, and physical abuse of elders is much too common, and community agencies and the law are doing new undertakings to catch up and prevent these types of situations. We strongly encourage you to alert the Department of Human Services, the county attorney’s office, or law enforcement agencies if you know or have good suspicion to believe anyone, but particularly the more vulnerable citizens of our communities, is being abused or taken advantage of by another.
  • On that note, Prof. McEowen and Ms. Maitre came back on to finish with a survey of ethics for Iowa attorneys doing estate and tax planning for clients. Those areas of law are highly complex and, unlike some areas of law, the statutes and case law (and even just clients’ positions) continually change. It is crucial that attorneys keep themselves updated and aware of the recent developments in these fields, particularly.

It was another great year for the CALT conference, and we’re glad we went along. A hat tip goes out to each of the presenters and the hosts. Have a good weekend!

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Center for Ag Law and Tax Conference – Day 1

This week, two of our staff attended the annual Center for Agricultural Law and Taxation’s (“CALT”) Seminars on Ag Law and Estate Planning. Here are some of the big topics addressed on the first day:

  • Professor Roger McEowen began the morning by discussing some of the recent notable case law across the country and legislative enactments in Iowa. Some of the highlights included wrongdoing by township trustees in a fence line clearing agreement between neighbors (Kilroy, et al., v. Peters in Ohio); the severe consequences in failing to complete a diligent search of title for mineral rights in land being sold ‘as is’ to a buyer who wants those minerals (Argo Holdings, LLC v. Renick in Kansas); takings and money exactions (Koontz v. St. John’s River from Florida); and several cases dealing with crop insurance issues took center stage. New Iowa law SF 316 eliminated the exception to the statutory written notice requirement for the termination of farm tenancies where less than 40 acres is leased. So, always give a written notice now, no matter how small the farmland is you are dealing with.
  • Utah attorney Phillip Nelsen spoke about the abilities property owners have in protecting themselves, their property, and their animals. Mr. Nelsen said that of all his talks around the country, more farmers in Iowa than anywhere else have questions regarding the use of spring guns or traps on their land. Iowa law simply does not allow these to be used in protecting mere property. Mr. Nelsen also discussed the status of gun trusts in the wake of a new executive order requiring background checks and registration for beneficiaries. Read about the executive order here.
  • Kansas attorney Karen Mellvain described her experiences in dealing with the Risk Management Agency in crop insurance cases. She reported that one issue often appealed is when a farmer does not pay his or her premium due to a disagreement over previous payments (or lack of). But, even if a farmer’s excuse or protest is for very good reasons, failure to pay for the coverage shuts off any equitable relief under the RMA. Therefore, a farmer should protect his or her interests and pay the upcoming premium in order to get coverage before you lose out. Continue to protest, but do not neglect purchasing for the upcoming season. Also, if you do have a claim relating to a loss, be sure you are proactive, taking lots of pictures and documenting evidence of your compliance and of the disaster, and within 72 hours of the loss, you should have your notice to your provider in writing. An oral notice after the 1st hour, even if it’s later supplemented by a written notice 73 hours afterward, will do you no good.
  • The afternoon session started with Prof. Jesse J. Richardson of West Virginia University College of Law discussing recent federal cases involving the Environmental Protection Agency (Alt and Rose Acre Farms). A number of issues are left unresolved from these cases, and they may need to be addressed by the Supreme Court in a later term. Prof. Richardson was followed by Christina L. Gruenhagen of the Iowa Farm Bureau, who notified the group of a new EPA Work Plan Agreement between the Iowa Department of Natural Resources and EPA Region 7. You can find that agreement here. Ms. Gruenhagen also discussed the various ways to prepare for a DNR siting inspection.
  • Finally, attorney Tim Gartin of Ames led two engaging seminars to close out the day. In the first, he discussed the various ways family law and judgments can present themselves in title opinion issues and real estate transactions. One good discussion revolved around the Iowa homestead exemption and the recently revised Sec. 624.23(2). The last seminar was about ethics, a topic that Iowa requires their licensed attorneys to continually review. Mr. Gartin’s session focused on many practical issues, including the conflicts of interest an attorney has in dual representation of the buyer and seller in a real estate transaction.

Clarification of Prevented Planting Standards for Our Area

In late August, the Department of Agriculture announced a statement that clarified acreage eligibility for prevented planting for the 2014 and succeeding crop years in the Prairie Pothole National Priority Area, which includes Butler County (as well as Grundy, Floyd, Mitchell, and almost every county in Iowa west of them).

Prevented planting, as many of our readers will know, is an extra insurance option most farmers can purchase that protects them against low yields due to a later than authorized planting (which may have been caused by frost, wet conditions, or other natural effects). The Farm Service Agency estimates that over 7.7 million acres in the United States were prevented planting land in 2013, with Iowa having over 613K in corn and 106K in soybean acres. However, further estimates for at least one state indicate this estimate was much lower than reality. It won’t be until December when we hear the final estimate numbers.

Prevented planting has several limitations, and one of them was the restriction that in order for a plot of land to qualify, it had to be “physically available for planting.” The regulations state that acreage is “not considered physically available for planting” if the acreage “has any other condition, as determined by [Risk Management Agency], that would prevent the proper and timely planting of the crop when weather and other conditions are normal for the area in which the acreage is located.” [Emphasis added].

But after persuasion from Senators John Hoeven and Heidi Heitkamp and Congressman Kevin Cramer, all from North Dakota, the ‘normal’ weather condition provision was eliminated due to its very subjective nature. Risk Management Agency Administer Brandon Willis stated, “The goal is to make Federal crop insurance policy more objective and to provide clarity for the producers facing prevented planting losses.”

This doesn’t mean that just any land is eligible, though. If the land is a ‘problem spot’ that is consistently hard to farm, it can’t qualify for prevented planting. In 2011, the Agency implemented a ‘1 in 4’ requirement, so that eligibility required farming the land in at least one of the prior four years. Some of the latest reports on the new changes made it appear that the ‘1 in 4’ requirement itself was a new provision. We didn’t think so, and after contacting John Shea at RMA, he confirmed with us that the ‘1 in 4’ has indeed been in place for a couple of years now. The new addition, however, is that in order to get out of the ‘1 in 4 problem spot,’ —back into eligibility—a farmer must plant and harvest a crop (cover crops don’t count) two years in a row on that land.

Readers, if you have any other issues with prevented planting or farm regulation compliance, we’d like to hear about them and build a dialogue focused on helping our farming clients and community. Drop a comment or send an email anytime.