Dakotafest crowds strong, livestock producers remain hopeful
MITCHELL, S.D. — With discussions of trade disruptions and low commodity prices hanging high in the air, farmers at the Dakotafest trade show here were focused on what they can can do on the ground and at home.
Dakotafest runs Aug. 21-23 at Schlaffman Farm on the southeast side of Mitchell, S.D., with its more than 500 exhibitors and educational sessions. The event is managed by IDEAg Group LLC.
Amy LaTessa, show director, said the event was on-track for attracting its typical attendance of 30,000. LaTessa said gubernatorial and U.S. House candidate forums on Wednesday were expected to be big draws. The cattle and livestock sector has received high interest due to relatively strong prices in a time when feed costs have declined.
Jake Geis, Freeman, S.D., a veterinarian with Sioux Nation Ag Center, described in one of the educational seminars how producers could employ corral equipment more effectively to cut down cattle handling time, increasing cattle health and improving satisfaction with the work.
Sioux Nation Ag Center is based in Sioux Falls, S.D., and became the new sponsor of the event's livestock demonstration tent. Sioux Nation Ag bills itself as a one-stop shop for livestock producers in eastern South Dakota and western Minnesota, with veterinary services, feed and nutrition, as well as marketing and financial analysis.
Geis related virtues of "Bud Box" structures — squares made from fencing panels that allows producers to position themselves correctly with cattle — as a low-stress way to move cattle through alleys. The technique was innovated by a cattle handling expert, Bud Williams, and is gaining popularity compared to the more standard "tub and alley" system. Geis said producers can use the tools to save valuable time and money, and “get more satisfaction in handling animals.”Dust the trusts
Jayna Voss, and Bobbi Thury, cofounders of Legacy Law firm, Sioux Falls, S.D., told event-goers new federal tax reform means now is the time to "blow off the dust" of their estate plans.
The two said estate planning is much different than in the past due to changes in the tax reform package. The exemption for estate taxes is now $11.18 million per person and $22.36 million for a couple, "before you pay one dime" for federal inheritance taxes. South Dakota doesn't have any estate taxes at all. The new act carried over "portability," so a surviving spouse can carry over a spouse's exemption.
Thury noted that the $11.18 million exemption will "sunset" in 2025, so some people are taking advantage now to make sure they are passing down assets in case the exemption isn't continued.
"Not updating your estate plan can actually cost you money now," she said. In the past, farmers and others created complex trust arrangements to avoid estate taxes. Now simpler plans needed because of the changes mean they could save money by revisiting those plans.
"It's not unheard of that people are paying $20,000 in trust administrations. We heard one with over $40,000 in trust administration," she said.
There was a slight increase in the annual gift tax amount.Spousal trust
In 2016, South Dakota enacted a "special spousal trust."
If a couple owned property together in separate trusts, they now can join them into one trust because of a change in the estate tax laws.
"You could put special language in that trust so at the first death, all of the assets get a step-up in basis," Voss said. "Many of our our farming clients have property they've held for many years and it's very low (tax) basis. At your death, it gets step-up in basis.”
The step-up is the readjustment of the value of an appreciated asset for tax purposes upon inheritance, determined to be the higher market value of the asset at the time of inheritance. The step-up minimizes the beneficiary's capital gains tax.
Without the special spousal trust language, at the first death, the property gets a one-half step up in basis, Thury said. This wouldn't matter if the surviving spouse plans to hold the land or the other assets and doesn't pass to the children until the second spouse's death.
"But, if there is a need to sell a piece of ground, if someone has to go into a nursing home, or if one of the children wants to buy out some of the land during the surviving spouse's lifetime, this is a big advantage,” she said.