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Leasing as an Estate Planning Tool
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Leasing is an excellent way to transfer assets from one generation of farmers to the next. GreenStone Leasing Specialist expands on the many benefits of leasing.

Source: GreenStone FCS Dollars and Sense Column in Michigan Farm News

Leasing as an Estate Planning Tool

The benefits of Leasing are numerous but many people are not aware of all the benefits that Leasing can provide to their business operation. The usual benefits such as tax savings from accelerated depreciation, 100% financing, reduced collateral requirements and protection from operating obsolete equipment are the most common ones. But there is one benefit that is often overlooked when doing financial and/or estate planning.

Leasing is an excellent way to transfer assets from one generation of farmers to the next. Quite often it is the parent of the business that is in a higher tax bracket and has the need for the tax write off

By having the parent or business take out the lease on the piece of equipment or building, they get the benefit of the tax write off for the lease and at the end of the lease, there is usually a residual due on the asset and the lessee has the option to return the asset, continue to lease the asset, or purchase the asset for a given amount of money.

If the option to purchase the asset is taken, the leasing company provides the lessee with a bill of sale giving ownership to the lessee. Instead of the lessee taking ownership, it can be designated to have the asset sold from the lessor to another individual or business rather than the lessee such as to the next generation or other business. By taking this option, the lessee doesn

So if you have a son or daughter that would like the option to buy into your farming operation, this is an excellent option to make those transfers beneficial to all parties. Contact your local leasing advisor for more information on how this type of lease can add value to your farming operation.