The Impact of Long Term Care and the Family Farm

In this episode, John and Lisa discuss how the financial strain of long term care can impact the family farm and some thoughts on what to do about it.

Episode Transcript
John
Hey everybody, we are going live again next episode for you out there.
Lisa
About 20 seconds.
John
So call in and ask your questions. The number is 903-793-1071. Now here are your host John Ross and Lisa Shoalmire.
Lisa
Well, all right. Welcome everyone to another Saturday episode of Aging Insight and John and I are here live in the studio today, we appreciate those folks who... last Saturday, John, I believe there was a rerun.
John
Yeah, we did have to run a rerun, rerun.
Lisa
But there was a great reason.
John
It was, it was for a good cause. Lisa and I were down in Tyler, Texas. We were matching down through downtown Tyler with a big group of veterans down there trying to raise awareness for veteran suicide. For anybody who doesn't know out there, the statistics are showing that roughly around 22 veterans commit suicide per day in this country.
Lisa
Yeah and for those of you who are listening to the radio, if you tune in on our Facebook live, if you go to Facebook then you go to the Ross and Shoalmire Facebook page you can see... you can join us live and you can even see John's commemorative T-shirt. 
John
Yeah, I've got my Veterans Lives Matter t-shirt on with the big 22 on it. But, yes so that's what we were doing last weekend. It was a great event, bunch of veterans out there, lots of different eras.
Lisa
Yeah, there was everything from Vietnam to… I think guys that just got back last month. 
John
Yeah, and as we had stops along the way through town, some of the older veterans that were not able to do the match were out there serving pizzas and things like that to the veterans. So, really did have kind of a full range of folks out there.
Lisa
Yes, so that's why we weren't here last Saturday but we are back live this Saturday with you and of course as we say every week, we couldn't be here if it weren't for the folks that help us pay the bills so we can have some airtime and some equipment to come to you. I give a special thanks to the Barnett Agency, Derricks and Memorial Hospice, River View Behavioral Health, Kurt Greening Company, Califon Creek Estate, St. Michael's Hospital, the Retreat at Kingwood and Red River Federal Credit Union, Twin City Rehab and Inspirations Health Care and Rehab in New Boston Texas, our folks out there on the West End.
John
Yeah, thanks to all of them and of course thanks to all of our regular listeners out there, who hopefully are tuning in this week and excited now that they are getting a live program.
Lisa
Yeah, so well we've been trying... we've been trying to get it in live every Saturday so...
John
But we fail occasionally but that's all right because... well because of that we are busy.
Lisa
Yeah, well you know we are busy. You know this week, any given day of the week I think John you were out Eldorado, I was out toward Paris, we were in Texarkana, we were just... Tyler.
John
And Tyler as well again.
Lisa
Just...
John
Just all over the place.
Lisa
That's right. You know and John every week it seems like... sometimes we start talking about what are we going to talk about on the radio this weekend? Usually Thursday, Friday John and I start kind of biting back and forth some thoughts about that and it’s interesting John because it seems like things come up during the week that it just seems natural that that's what we are going to talk about on the radio.
John
Yeah, it's actually relatively easy, we usually for us to come up with some concepts to discuss because we've been presented with those issues throughout the week. I know this week one thing in particular has kind of reared its ugly head, both with a couple of Lisa's clients and with a couple of mine and that's issues related to the family farm.
Lisa
Yeah, we've got... in our area we are at East Texas, South West Arkansas type of practice and so we miss it with a lot of families that are still running family farms. John I was looking at some statistics and you know a lot of us see the big corporate firms, in all of the world but as big as Cornagra and some of those folks are, well over 80% of our farms in the United States are still family owned and run and operated.
John
Right and particularly around our area you know when you started talking about South West Arkansas and East Texas and now particularly in Arkansas, I know we see a lot of chicken farming and they may have contracts with large entities like Tyson or Pilgrims, but the farming operation itself those are all still family run.
Lisa
Right so and of course we have a lot of folks that run cattle on their places that they got the land and so they run a lot of cattle. John, what do you think about being an elder law attorney? I'm a city girl so being an elder law attorney and speaking with families about their family farms and how these operations run and the business side of things, I get an insight, I get a view and just this week I had a client he went to, we were talking about some of the family firm issues, he lives …now and he started showing me all of his mamas and babies. His cows and calves, and he even showed me where he had a couple of cows that had quadruplet calves. I had never had of that before.
John
Yeah, I didn't even know such a thing was possible but you know I do remember when I was a kid, going up to Oklahoma to my grandfather on my mother's side, going up to his cattle ranch and he was always very proud. He would take any new visitor for a ride in the pickup and you were going to head up through fields and he was going to show you some cows.
Lisa
Yeah, so that's a really interesting part of our area is that we've got generations of families that are still on the property that their great grandparents purchased were able to acquire and you know a lot of times John, a lot of these families you know when a parcel up next to their place comes up for sale, they buy it and they add it to their firm.
John
Yeah.
Lisa
We see a lot of that, but just like 80% of farms, well over 80% are still run by families you know farmers are aging John...
John
Yes, it is an aging demographic.
Lisa
The statistics are showing that over a third of our farmers are over age 65.
John
I'm surprised it's not higher frankly...
Lisa
So yes.
John
And I bet it is around here. I've done some demographic research for East Texas and South West Arkansas and I know like the county where Gilmer, Texas is located I think something like 32% of the population in that county is over 65 compared to a state average in Texas of around 4%.
Lisa
Yes so East Texas it's an aging area, it's of course you know it's a mostly rural area and we have lots of families who are still operating the family farm, you know there next generation is coming up and running those cows, running those chicken houses and John that can run into a problem when that senior member of the family as far as encounters a health crisis, or even upon death and transitioning that going farm. You know because John these firms, many of them provide the bulk of the support to these families. 
John
Absolutely.
Lisa
I mean yet, a lot of times we'll talk to a family and somebody... you know the wife might be teaching school but it's really those cows or chickens that are supporting that family, usually multiple generations.
John
In many cases yeah, absolutely. You know the interesting thing here is, I know when I was originally studying tax law in law school and I suspect this was probably the same thing for you is, there was a quite a bit of talk in the context of the taxes and particularly the estate tax.
Lisa
Right those death taxes that were hitting those family farm operations because you know if you think about it, dirt maybe a great asset but you can't go spend it at the store.
John
Yeah, that’s exactly right and so back in the days where the estate tax exemption amount, that's the amount that you have to be over before you have to pay any death tax, but you know back when I was starting out, we are talking $625,000...
Lisa
Right, 600,000 bucks of any assets over 600,000, you basically were paying on average about 45 cents of every dollar in value over that 600,000 through the IRS.
John
Right, so you can have a relatively modest family farm but once you added in the value of the land, the value of the equipment and the value of the livestock or their fodder crops.
Lisa
Standing crops, yeah.
John
Or whatever, you can easily cross that exemption amount, old taxes and yet not have any cash to pay those taxes with.
Lisa
Right.
John
Now, that was then.
Lisa
Right, that was I would say 20 years ago, that was kind of the heart problem with family firms and keeping them going was that too many farmers and farm families were having to sell off assets upon the death of that senior member of the family in order to pay those debt taxes. But John nowadays we don't run into that too frequently.
John
You know now when you are talking about an estate tax exemption, a little over it's like 545,000 or 5.54 million dollars.
Lisa
Yeah, that's a big difference between thousands and millions.
John
Sure, anyway it's about 5 and half million bucks and that's per person so for this husband and wife farmers that's... We are talking roughly 11 million dollars that can be passed tax free at death.
Lisa
So yes, so you know most of our family farms with a couple would fall below that 11 million dollars in value you know, that’s a vast majority so...
John
No, I did hear recently, I had a gentlemen who from Paris, Texas who had a firm... his firm was actually located in Illinois though but it was a very large farm and it did exceed those exemption amounts. I would say for 99% of the folks that come through our office, estate tax even when they have a firm that's valued at half a million, million, even two or three million dollars, we are still way below the estate tax exemption amount and so for the most part you know when Lisa and I were being trained in how to do this kind of work, the entire focus was on protecting the farms from the estate tax, something that as a general rule is just not an issue anymore for the vast majority.
Lisa
Right, so you know and we still get those questions because you know farmers you know through the generations they... maybe their grandfather, their parent experience that issue with the death taxes but that's no longer an issue and John, like you said when we were being trained, that was the... I would say not only the primary focus but practically the sole focus on saving family farms and now 15, 20 years later, this death tax is not an issue but the biggest threat to family farms and the continuation of those farms, and the assets, those farm assets staying in the family, the biggest threat is now long term care cost.
John
Right because there is couple of factors in all of these, first of all one of the thing that I do see a lot of these farm families is what we are generally kind of refer to as land rich and cash poor.
Lisa
Yes, land rich cash poor.
John
You know if you start building up some cash resources many of these folks will use those cash resources to buy more land, buy new equipment...
Lisa
Or oay off the debt on the old equipment.
John
... Pay off the debt on the old equipment but as a general rule you know all of your cash resources are being rolled back into the farming operations.
Lisa
Can we say cloud back into the farming operations?
John
We could.
Lisa
Yeah, the point is that many of this farmers you know they are from season to season ,cash comes in but cash goes out and so we are not building a very large cash reserve totally.
John
The other thing is, is that most of these farmers are particularly if that's being their sole job anybody who’s ever looked at a farmers tax return you now they may have gross income that's quite a bit but by the time you take all the various deductions for depreciation of the equipment and the cost of the goods, the hay or the chicken feed whatever it is, by the time you fight for it all the cost, their net income for tax purposes is typically very low.
Lisa
That is true and the...
John
If your income is very low and you are self-employed, the one thing that you are not really doing is contributing to self-security.
Lisa
Yes, so you are not contributing to social security for you know because the self-employed person they have to report their earning social security and they kind of pay a double tax on their social security. If it's not very much, well then by the time you reach a full retirement age, you are not going to be rolling in the money from your social security. Not anybody is I guess.
John
No, but they are also not getting big pensions that you know maybe they work for the federal governments so they are getting pensions. There's very often very little other sources of income other than what that firm is generating even once they've reached into full retirement age and are getting self-security because again I have seen many of these programs because source of security it's half or a quarter of what some of their peers, who had just have good old fashion W2 wage earning jobs their whole career. They are employers when they have worked their employers and paid for, paid in social security and things like that whereas as the self-employed folks often haven't.
Lisa
Yeah, no it's not unusual at all these self-employment farmers, well I'll see the retired couple where their social security is below 1100 dollars combined.
John
Yeah, absolutely. We've got the... we've said it all up here, we've got valuable and sometimes very valuable but ill liquid asset and very little cash or recurring non-resource produced income and then you have the health crisis. That's where the problem starts so we are going to take a quick break and when we come back we are going to keep talking about this and this is going to be basically our topic today and of course if you have any questions, you can give us a call or during the break get onto Facebook and that way you can check us out live on Facebook so stick around we will be right back.
Lisa
All right.
John
Okay, so we are not on the air so any of y'all who are watching on Facebook, you like my shirt? This is the one we were talking about this is... I bought this shirt because last weekend we did the Silkies hike down in Tyler, which was to raise awareness for the 22 veterans that commit suicide per day. We need to end that business and so we've got to raise awareness out there and we've got to let the veterans in the community know that there is a support structure around them, that there's people they can reach out to, there's people that care and give a damn. We need them to know it, we need them to be out there and this particular shirt I'm not trying to... I get no money off of this but I got this from a place called Ranger up Apparel. They actually... they contribute a part of the proceeds to this... to veterans program. I don't mind giving them a shout out, it's a veteran run company, it makes t-shirts related to veteran stuff and particularly with these t-shirts they shared some of those proceeds out there so, It's good stuff.
Lisa
Yeah, that was a fun deal last weekend, a little chilly for April when... so John's in a t-shirt and some PT shorts. Is that what you call?
John
Yes, maybe you would call those PT shorts. I didn't realize this, but the shorts are very small and this is what we... When I was in the rains this is what we used to wear...
Lisa
PT
John
... for PT. Apparently now you cannot wear them.
Lisa
They are prohibited.
John
They are prohibited on military base even if you are not on duty, even if you are just going for a Saturday run you apparently cannot wear those shorts, I guess they have... everybody has realized that their things are so small they just, they crossed the line into indecent I guess.
Lisa
Yeah, they are... they were a little small.
John
Yeah, they are a little small and it seem like maybe some of the guys that were doing the hike maybe had not bought any new ones as they had grown physically, may their shorts had stayed the same. Some of them were a little tight I... but you know it was all in good fun and all about kind of building that camaraderie, pretty neat little deal. You can get on Facebook if you are a veteran, you can look on Silkies Hikes Tyler they have a Facebook page you could check them out and if I can get around to it, I may very well try to put one together for the Texarkana area, I think it would be a lot of fun.
Lisa
Yeah, I think so too and then we've got a lot of veterans in the Texarkana area that would come out and support something like that so we are going to try.
John
That's right. Yeah, if anybody is interested, I think that's a good idea let me know and I will try to jump on it and we'll try to put something together there, see if we can make that happen. All right, we are going back live in five seconds.
John
Welcome back to Aging Insight everybody this is your host John Ross here live in the studio with Lisa Shoalmire and we weren't live last weekend but we are live this weekend. We are also live on Facebook, it's the Ross and Shoalmire Facebook page, if you haven't been on there get on there and give us a like and check out my t-shirt because it's pretty cool. Anyway, so today's topic we are talking about the interplay between you know there’s family farm and the long term care situation and...
Lisa
I've been confronted with this a couple times just in the past week and it seems to run in... I don't know you know how things kind of run in threes or whatever but we've had folks who... we've got that... I would like to say that tough, greedy, crusty old farmer who's battled the land and droughts and all of those things for his whole life. He is now 75 plus years old, his kids 50, 55 but you know John that farmer; do they have a lot of confidence in those 50 year old adult kids sometimes?
John
Not often, not often. All right looks like we've got a call on the line. Caller you are on Aging Insight what can we do for you? Just, you can call yourself whatever you like. That's right, that's exactly right. Okay. Sure. Sure yeah, you've got... I mean basically you've got somebody close to you, they've passed away they've left their will but this is very recent. The main thing is probably... First of all, like if they had a home or things like that anything you can do to help try to secure everything, you know make sure nothing walks away, thieves and stuff will check obituaries and stuff like that thinking that there might be empty houses around. For the most part what you are going to probably want to do is, get some advice maybe call our office, our Monday morning and see if you can get in and visit or visit with one of us over the phone and let us... I actually have a document that has a whole list of things to do after somebody dies and we can get you one of those at our office.
Lisa
Yeah it's... no, we are coming up to our hard break so we have to take this break but maybe when we come back John afterwards we’ll just going to give this quick little overview from Margaret so... 
John
That's right. Yeah just keep listening and we'll talk a little more about this when we come back after the break, okay? Yep, no problem.
Lisa
All right, you know John that's the deal I mean you know, it's not something you do every day.
John
No, but it is something we do every day.
Lisa
Right.
John
So, yeah everybody stick around we'll be back here in just a second. Unfortunately, those of you who are watching on Facebook can't hear we just have no way of connecting the phone calls to the Facebook live but the lady that called in said she wanted to use the name Margaret, she was obviously very nervous about calling in but also you could hear some sadness in her voice. It sounded like somebody close to her had died recently, maybe just within the last day or two, had left a will and she I guess is in possession of this will and she's just really worried, she doesn't know what to do. I get this all the time, I've even had some very close friends of mine call when they've lost a parent or somebody close to them and they just don't know what to do. One thing I’ll mention we actually at our farm Ross and Shoalmire we have about a three or four page document that's called, “What to do when somebody dies” and it says exactly what it earns. It's broken down with the things that you should do immediately before death, the things that you should do immediately after death, things that you should do within the first say couple of days, first couple of weeks, first couple of months and then within the first year and I have passed that thing out to dozen if not hundreds of people at this point and almost everybody has said that they enjoyed it, they got a lot out of it, those are available anybody could call our office. The office phone number is 903-24
Lisa
223
John
Yeah, sorry 903-223-5653, that's our main Texarkana office but no matter where you are listening you can call that number and if you want one of those somebody can email one to you, or fax one to you. I mean heck if we think a way we might even be able to create a link here, where if you are watching you'll get there but we are not quite that tech savvy just yet. I mean it's one thing we are dong Facebook live, which is pretty tech savvy but we still got some room to go but yeah. We will probably talk about that a little bit when we come back her in just a second.
Lisa
Yeah. I appreciate our caller, was a little nervous but that's what we are here for, that's why we do Aging Insight because you know that's someone that can call in, you know sometimes people are even more nervous to go and actually calling an attorney’s office.
John
Sure.
Lisa
That's the reason we show up every Saturday and make it a live program so that people do have the opportunity to call or make a comment there on Facebook so that's good stuff.
John
Yeah, that’s good stuff that's why we do it so we can help people and get them the information that they need when they need it. It's funny... a lot of these things especially when they are happening to you they can feel like crisis tie. Often once you get the information and you get the education about it, you realize that it's not near the crisis that you think it is.
Lisa
Well, it's always the unknown, and unknown always makes you more anxious, more nervous so once you get some information, some guidance, you take that deep breathe and you just dig in and do your job, that's all there is. 
John
That's exactly right. Looks like we've got about 20 seconds and then we'll be back live on the radio. Hope you all are enjoying the show. I've seen lots of little likes...
Lisa
Yeah, enjoy that.
John
... and a little heart so, we always appreciative that. Alright, here we go. 
Lisa
Alright everyone, welcome back to Aging Insight, this is Lisa Schumaier and I'm here in the studio with John Ross, we are elder law attorneys here in the Okla-Tex area and guess Forth state area if you want to say it that way, I don't know.
John
Really, yeah.
Lisa
Anyway, we are alive in the studio today so if you have a question you can always give us a call at 903-793-1071, and today our topic is been taking about some of the issues with the family farm and the transitions and help care cost, but John we always encourage a caller, no matter what the questions on their mind is, whether is with our topic or not, we want them to call in and get some answers. 
John
Call in and ask.
Lisa
Before the break Margaret called in about having a close friend that had passed on and obviously this was a friend that trusted her and had confidence in her, and Margaret we are so sorry for the loss of your friend. This person had left with her a will and she just at a loss as to what to do next, and so I just wanted, and... John, in school they always told you that if someone had a question, probably someone else has the same question so...
John
Yeah, absolutely. 
Lisa
I just wanted to hit a couple things and we didn't get a chance to ask Margaret whether she was in Texas or Arkansas but some general things that apply, no matter what. If you were the one that is in possession of someone's last will to the best of you knowledge, then the law requires that you bring that will to... through the Probe process.
John
Yeah, I guess the first thing is... because that's going to take a little time.
Lisa
Yeah, that takes a little time, there's no rush to do that. It doesn't have to be done this week or next week. The law actually provides quite a bit of time for you to do that but that's just... if you're the custodian of that document, the last wishes of someone then there is a point where you will actually deposit that with the court. 
John
Before then there can be a few things like Margaret who've talking about contacting the banks but you don't have a death certificate yet. In my experience with most of the banks is that if you inform them that somebody has died, that they will generally note that in the account, they may put a freeze on the account.
Lisa
John many banks have a stuff person at the bank who monitors any death announcements in the obituaries.
John
Yeah, they look for them in the obituaries and stuff like that. Along with that would be gathering up things like ATM cards, credit cards, unsigned cheque books, things like that. If you can get a hold of some of those things, again, kind of securing some of those personal assets and personal effects, particularly things of value. Usually trying to secure some of those things but I think the biggest thing is there's really so much to all of this, because just take those bank accounts. Whether those bank accounts were in that person's own name with no beneficiaries, whether they were in that person's own name with beneficiaries listed, or whether they were in that person's name, and somebody else's name as joint owners...
Lisa
As joint owners.
John
... is all going to change that factors in all of this and that's just the banking. We hadn't even gotten into the things like the real estate or personal property. That's one of those things where it really does take a good 30, 45 minutes, hour of going over that person's situation, going over the family dynamics, looking at the documents and analyzing all of that to be able to really give you a good, solid knowledge of what needs to be done, what doesn't need to be done, how do you do the things that need to be to be done and all of that. 
Lisa
John, and one thing I would point out for Margaret's fit in for others is that there is somewhat of a limbo period, I guess you would say because I've had a lot of folks that a family member or a friend has passed away and then a family member comes in and says, "Well, I was appointed executor of the will so I'm going to start doing this, that and the other " Literally this is maybe at the wake.
John
Yeah, within days or hours in some cases.
Lisa
The reality is that under the law, if there's a will situation until a court actually appoints the executor, then there is no one that has legal authority to deal with that person's business affairs, in property affairs.
John
That's exactly right.
Lisa
We certainly hopes that family or friends will like we say secure any valuable property, things like that. Technically, no one yet has the legal right and authority to deal with that until that Probe process is started.
John
Because of that, the legal process is slow. Had a former attorney that became a judge and he used to always say, "There is no such thing as a legal emergency." Because the law just doesn't respond quickly enough.
Lisa
Yes, there might be a police... a law enforcement emergency.
John
Right, or a medical emergency, but the law is just not equipped to deal with emergencies so there really is nothing legally speaking that equated to an emergency but I would encourage Margaret there to get some information, whether that's from an attorney like us or somebody that is very familiar with the intricacies of Probe process and all of that sort of thing. 
Lisa
Margaret, just my encouragement to you would be that, yes there are a lot of things to do but the idea is to find guidance who can hold your hand and guide you right through those processes, to... you're grieving loss of your friend but that guidance, you can do the job. 
John
You'll find out that it's not merely as overwhelming as it may seem on the front
Lisa
Right.
John
Like Lisa said, you'll go through this, this one time, somebody like Lisa and , we go through it literally several times a day, several days a week, and so there's really very few situations that you could go through that a professional in the business is not gone through already or somebody else.
Lisa
John, it always makes me think when we talk about... we always do contrast with the medical stuff, medical profession and when the surgeon comes in, they tell you about the procedure the need to do and that you need, it's overwhelming. When they say they're going to make an incision here and they're going to do this, and this do that and this is the recovery you can expect, I'm overwhelmed. I'm probably number six in line that day for that surgeon where he's...
John
He's going to do a bunch of them and it's not that big a deal. That's exactly right. I hope all that helps Margaret and like I said. If there's anything you can do reach out, find your professional and that guide that I mentioned of what to do following the death of somebody. Whether you want it or anybody else that wants it, you can call our office at 903-223-5653, you can swing by to the office, its 1820 Galleria Oaks, and we'll give those out to anybody we'll email them to you, fax them to you, we'll tie them to a pigeon if you'll send a trained one to the office, whatever you need we want to get that information out there to you so...
Lisa
Very glad to share so...
John
Going back to the farm we were talking about the fact that you have these folks that don't have a lot of income, they don't have a lot of cash, and yet they have these very valuable assets. We see them, they have the health crisis, whatever that happens to be and they've gotten now to a point where the costs related to their care are extreme. 
Lisa
Right, and even John a lot of times with what we've seen in farm families is they try to care for that loved one at home as many people do. As absolutely long as possible and sometimes John that means that they're already spending their limited cash resources on some outside care givers that can come in and relive the family some. Often times either the money runs out, the family stills having to work the care needs of the individual is just overwhelming to the family. When it comes to married couple, a lot of times a spouse cannot lift or move a person who...
John
You can't transition them and...
Lisa
... and so it just becomes to where the care, the level of car falls because not for lack of want to and effort, but simply from ability and then we start getting to the point where long term care, skilled nursing is just a must.
John
Absolutely. That's where we start running into problems because when you start talking about bringing her in private in-home care at 15 or 20 bucks and hour, where you're talking about assisted living at three or four thousand dollars, and whether you're talking about nursing home at five thousand bucks, you can run into situations where you have essentially bled out on the cash. The cash resources are gone. Now all you're down to is the land.
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