Over Thanksgiving Break, I was talking with a family of farm descendants. Their father died and his estate consists mostly of farm acreage. The appraised value of the land was considerably high and would subject the estate to a large amount of estate tax liability. Of course, there is little liquidity to pay any estate tax.
They need to consider whether the real property qualifies to use a special use valuation. The advantage is that the real property is valued at its farm use value rather than its fair market value. If the farm is located in Ohio and passes from the decedent to a qualified heir, such as a surviving spouse or children, it may qualify. The farm property must be devoted exclusively to an agricultural use. Also, the adjusted fair market value of the farm real estate must be at least 25% of the value of the decedent's adjusted gross estate.