Staying out of trouble online

Here is a good article about staying out of trouble (both ethical and practical as well as legal) while using the internet: Doing the Right Thing -- 5 Tech Pitfalls by Dan Reilly

CASH RENT FARM LEASES

Now is the time dictated by Iowa law to begin negotiating crop land leases for 2010 or at least notify your tenant/landlord, as the case may be, if you wish to change any of the terms in your current lease. (Remember that mutual consent is required if you want to make changes in the middle of a multi-year lease.)

Rents this year are leveling off or declining, in general. Rent on one farm I am involved with that always has competition among renters, went from $250/acre to $230/acre, this year. On the other hand, rent for a farm with a CSR in the low 60’s went from $175/acre to $200. [See also Cash Rental Rates for Iowa 2009]. The huge corn acreage, rising input costs and the slow economy are causing farm operators to bid more conservatively. Nevertheless, low interest rates and fear of inflation continue to keep land values high, which directly impacts farm rental rates.

This does not mean rent for your particular farm should go down, if the rent you charge has been stagnant or lagged behind the run up in recent years. At a minimum, you want to keep up with inflation. Not doing so is like putting your money in a savings account and paying the bank interest to keep it there. Though low, inflation as measured by the CPI was 3.8% last year and had been hanging around 3% for the four years previous. If you only raise your rent every 3 or 4 years, you should consider raising your ask by 10-12.5% just to catch up with inflation.

Basing cropland rent on the CSR (“corn suitability rating” or in some regions “crop suitability rating”) of the soil in question is the most accurate and fair way to arrive at a comparable rent [See Computing a Cropland Cash Rental Rate]. As was the case last year, I think $3/pt will catch most of the rents on good quality farm land in this area.

If you wish to terminate a cropland lease ending March 1, 2010, and have not already done so, you must serve notice in the manner set out in Iowa Code §562.7 on or before September 1, 2009. This statute does not apply to forage land leases (pasture and hay) or custom farming arrangements, but by tradition, many farm operators have come to expect notice by September 1 and may become surly or even confrontational if notice is delayed past that date.

Speaking of pasture, the increase in corn acreage in recent years has resulted in a tighter supply of pasture land and correspondingly higher prices.

Good luck with your negotiations!

Check out Kiva.org

Kiva is a microlending institution that has been featured on a number of programs and publications. It makes loans to individual and groups of entreprenuers in developing countries through local non-governmental organizations with a proven track record. When the loan is paid back you can lend it to a different entreprenuer or you can withdraw the money through a paypal account. Paypal is donating its services to this project for free. If you don't do anything for 90 days, the money gets donated to Kiva to support what they are doing. Otherwise, none of your money goes to administration unless you make a direct contribution.

I think this is a great way to teach capitalism to underdeveloped countries and I think helping to generate wealth in the poor half of the population will do more to stimulate the world economy than having Americans borrow money they don't have so they can continue to spend beyond their means. It might also spread a little good will and help undo the damage of the last 7 years.

Personally, I tend to favor the agricultural projects and other enterprises where the individual is actually making something rather than retail or reselling, but in the end, I think it all helps. http://www.kiva.org/lender/warren3455

So go to kiva.org and check it out.

HAPPY HOLIDAYS

I hope you are having a very Merry Christmas and wish you all a Happy New Year. May we all find innovative and resourceful ways to meet the daunting economic, environmental, and political crises we face.

In Johnston High School News

 CONGRATULATIONS to Mr. Yenger and students who competed in an academic competition, “We the People”, on 11/24. The purpose of the program is to foster a high level dialogue about the Constitution and to understand the principles and how they relate back to modern day events. JHS won 1st place in the state and will compete in the National Finals in Washington, DC in April. Students competing were: Kevin Shi, Fred Shen, Jennifer Ajluni, Alma Jovancevic, Joseph Payne, William McDowell, Ethan Nutter, Neal Herink, & Yelena Varley

Farm Land Real Estate Auction; Adair County, Iowa

Real Estate Auction Report:

November 19, 2008:

An 80 acre tract of level to moderately sloping riverbottom with 70.3 acres of HEL crop land with a CSR (corn suitability rating) of 79.4 on the tillable acres brought $304,000 at an auction conducted by Hertz Real Estate Services. There were a couple of grain bins on the property and an ROW easement through the middle of the parcel, but I don't think those factors affected the price appreciably. The price comes out to $4,324 per crop acre or $54.46 per CSR pt/a. That is an 8 to 10% drop from the way land was selling this summer. The biggest factors in that drop are the fall in commodity prices, uncertainty about the health of the world economy, and a tightening of credit (though ag credit and particularly ag land credit seems pretty solid compared to the rest of the financial industry).
Here is an interesting side note: The previous purchaser of this property paid $15,750 for the whole 80 in 1964. Even with inflation, a nineteen-fold increase is a pretty good return on investment (42.9% per year), and a stepped-up basis at death, to boot.

So you want to be an Executor

You are named as executor in the decedent’s last will (so far as we know). You have several options:

1. One is to do nothing and wait for the five-year statute of limitations to expire. This would involve risking the opening of an estate by a creditor who could force you to disgorge assets that you received from the decedent that were not paid to a priority creditor. Priority creditors are the expenses of administration of the estate (including any taxes owed and your court-approved fees), expenses of funeral and last illness, and any unsecured debts the decedent left behind (in that order).

2. Iowa law permits you to distribute an estate by affidavit that is less than $25,000 and does not include real estate (excepting real estate held in joint tenancy) without opening a probate estate. You are still obligated to pay any potential claims against the estate in the order set forth above and can be held personally liable if you distribute funds to the wrong creditor for the amount that should have been paid to the higher priority claim. If you choose this route, I recommend that you file the will with the clerk of court to verify your authority and for safe-keeping of the will in the event litigation follows.

3. You may file a petition for probate of will without present administration. This route encompasses all the factors set forth in No. 2 above, but includes publication of notice to creditors in a local paper for two consecutive weeks and mailed notice to known creditors, heirs at law, and beneficiaries under the will. This action starts the clock on the compressed statute of limitations on a decedent’s estate (4 months from second published notice or 30 days from mailed notice). However, with this option, you should be prepared for the possibility that a creditor will want an administered estate to be opened. At that point you would need to decide if you wanted to continue to serve as executor.

4. The third option would be for you to open a full probate estate. This would result in your obtaining letters of appointment from the district court which would give you the judicial machinery to compel discovery and marshal assets. You would become the personal representative of the estate and would have the following duties:

As Personal Representative of the Estate, your responsibilities include the collection and valuation of the Decedent’s assets, the payment of debts, expenses of administration and taxes, and the distribution of the remaining assets to the persons entitled to receive them.

Your first task is to identify and value all property in which the Decedent had an interest. Each item of property, together with its value, will be included in an estate inventory. By law the inventory must be completed and filed within 90 days after the date of your appointment. The probate inventory includes assets that pass outside of this will, such as joint tenancy property, life insurance proceeds, retirement accounts, transfer on death accounts, and annuity contracts. The probate code requires this to fulfill the orderly transfer of assets at death function of the probate process.

As soon as practicable following the admission of the Will to probate, notice of the admission of the Will to probate must be given by ordinary mail addressed to each heir of the decedent, and each devisee under the Will, and the creditors of the estate whose identities are reasonably ascertainable. This notice must be mailed to such person’s last known address.

Complete records must be kept of all cash and investment transactions. All receipts should be deposited to and all disbursements should be made by a check drawn on an estate checking account.

An Iowa Inheritance Tax Return would have to be filed, not later than the last day of the ninth month after death, but no tax would be due because the gross value of the estate assets are less than $25,000.00. Because the estate is less than two million dollars, no federal estate tax return is required.

The decedent’s final income tax returns covering the period through the date of death must be filed and any tax paid. You must obtain a federal tax identification number for the estate.

It may also be necessary to file federal and state fiduciary income tax returns for the estate. The number of returns filed and the filing deadlines will depend upon the income of the estate, the length of time the estate remains open and the fiscal year selected for the estate. It is to your advantage for the estate to generate at least enough income to offset the administrative expenses of the estate, including fees, if possible.

After all known debts, administration expenses, and taxes have been paid or provided for, a Final Report and accounting will be prepared. Depending on the length of the period of administration, it may be necessary to prepare one or more intermediate reports and accountings. Copies of the reports must be given to all persons interested in the estate. When the estate is closed, the Final Report will be filed with court. Normally, final distribution of the assets will await the closing of the estate, although as I said, many of the financial assets are being transferred directly into the residuary trust. However, depending on such factors as the size of the estate, the needs of the beneficiaries, tax considerations; earlier partial distributions may be in order.

As Personal Representatives, you are entitled to compensation for services performed and responsibilities assumed, and for reimbursement for expenses. The fee you receive is subject to income tax but not social security tax since you are not a professional fiduciary. You are entitled to waive any or all of your executor fee. All fees are subject to court approval.