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CapitalPress.com
December 15, 2017
Editorials are written by or
approved by members of the
Capital Press Editorial Board.
All other commentary pieces are
the opinions of the authors but
not necessarily this newspaper.
Opinion
Editorial Board
Editor & Publisher
Managing Editor
Joe Beach
Carl Sampson
opinions@capitalpress.com Online: www.capitalpress.com/opinion
O ur V iew
‘Cap and invest’ proposal short on specifics
A
recent presentation to
the Oregon Board of
Agriculture on a new “cap
and invest” effort under study
by Democratic leaders in the
Oregon Legislature and Gov. Kate
Brown’s administration provided
more questions than answers.
“Governor Brown wants
to decarbonize the Oregon
economy,” said Kristen Sheeran,
carbon policy adviser for the
governor.
Though details were lacking,
the plan would take money from
companies that exceed a state
limit on emitting greenhouse gases
such as carbon dioxide. Such
companies would include fuel and
electricity providers.
The money collected from
those companies would go to
other companies that keep carbon
emissions below the cap the
state sets. The state could also
sell emission
allowances to
the offending
companies and
spend the money
to build better
roads and offset
the effects of higher electricity and
natural gas prices, she said.
The state could also spend
the money to decrease or offset
carbon emissions, which could
benefit agriculture. Farmers and
ranchers wouldn’t be regulated
as emitters under the current
proposals, Sheeran said.
Among the questions generated
by the presentation were:
• How much, exactly, would
Oregon’s cap and invest program
reduce global temperatures? Ten
degrees? Five degrees? Less?
More? We assume that’s the goal
of any effort to limit greenhouse
gases, so we need to know the
answer to that threshold question
first. Some groups say their
proposals wouldn’t necessarily
stop climate change. Instead, it
would slow it. In that case, how
much would the governor’s plan
slow climate change?
• How much, exactly, would
the cost of gasoline, diesel
fuel, natural gas and electricity
increase under the plan? Nearly all
Oregonians — including farmers
and ranchers — buy fuel and
electricity, so any increase would
be important to know at the outset
of such a program.
• Oregon farmers and ranchers
transport their crops and livestock
all over the West and the rest of
the world. How much would those
costs increase?
• What would the impact be on
food processors and lumber mills,
which farmers and ranchers rely on?
• What would the impact be
on fertilizer manufacturers and
suppliers?
Similar programs have been
adopted or proposed elsewhere.
We have not yet seen proof of how
much they are reducing global
temperatures, either. In a recent
report California determined its
“cap and trade” effort had reduced
the state’s carbon emissions by 1.5
percent in 2015. The report did
not specify how much that will
decrease the global temperature.
While there are plenty of
computer models, there also
needs to be hard evidence directly
related to these programs. Without
such information, we are asking
businesses, including agriculture,
to pay an unknown price for an
unknown outcome.
There’s an old saying in
investing: Never make an
investment until you completely
understand what you’re getting
into. It’s true on Wall Street —
we’ve seen that proved time
and again — and it’s true when
considering Oregon’s “cap and
invest” proposal.
Five common farm
estate planning mistakes
and how to avoid them
O ur V iew
By MARIA C.
SCHMIDLKOFER
For the Capital Press
A
President Donald
Trump holds a signed
Antiquities Exec-
utive Order during
a ceremony at the
Interior Department in
Washington, D.C., on
April 26.
Associated Press File
Time to limit Antiquities Act
L
ast week President Trump
signed orders reducing
the size of two national
monuments in Utah, giving us
occasion to advocate changes in
the Antiquities Act of 1906.
Bears Ears, created last
December by President Barack
Obama using the Act, will be
reduced by about 85 percent, to
201,876 acres. Grand Staircase-
Escalante National Monument,
designated in 1996 by President
Bill Clinton, will be reduced
from nearly 1.9 million acres to
1,003,863 acres.
The Utah monuments are
two of a couple of dozen whose
boundaries are being reviewed by
the administration.
Attention is now turned to
the Cascade-Siskiyou National
Monument in Southern Oregon.
The original 53,000-acre
monument was created in 2000, but
last year President Obama added
roughly 47,000 acres.
Forest and farm interests
opposed that expansion. In their
lawsuit they maintain that some
40,000 acres of federal land
included in the expansion were part
of the former Oregon & California
Railroad land grant previously
set aside by Congress for timber
harvest.
Without providing specifics,
Interior Secretary Ryan Zinke said
the monument should be modified
to “address impacts on private lands
and to address issues concerning the
designation and reservation of O&C
Lands as part of the monument and
the impacts on commercial timber
production.”
Oregon Gov. Kate Brown has
promised to sue if the expansion is
turned back. Conservation groups,
outdoor clothing purveyors and
Indian tribes say they’ll file suit
over the actions in Utah.
Administration critics say
the president doesn’t have the
authority to alter the size of existing
monuments — despite seven other
presidents, both Democrats and
Republicans, having taken similar
action on 18 occasions. This is the
stuff of lawsuits.
It’s time for the Antiquities Act to
be revised, if not repealed altogether.
The Act has been used by
presidents starting with Teddy
Roosevelt to create national
monuments. The authority comes
with few restrictions. The president,
“in his discretion,” can designate
almost any piece of federal land
a national monument for “the
protection of objects of historic and
scientific interest.”
It’s easier than establishing a
wilderness area, or a national park —
both of which require congressional
approval — but can impose similar
restrictions on how the land can be
used.
Those increased restrictions on
already protected land hit ranchers
and loggers particularly hard.
We can’t argue that legitimate
treasures have been preserved
under the Act. But the power to
unilaterally lock up hundreds of
thousands of acres by fiat at the
behest of political allies, without
regard to local concerns, seems
undemocratic.
Only in Wyoming and Alaska
do local residents and their
elected representatives have a
say in the process. After big land
grabs, Congress placed limits on
the president’s ability to create
monuments in those states without
its consent.
We think residents of the other 48
states — particularly those of us in
the West, where these monuments
are more likely to be located —
should get the same consideration as
citizens of Wyoming and Alaska.
Readers’ views
Skagit County
elk mismanaged
Why don’t the Washing-
ton Department of Fish &
Wildlife (DFW) and Indian
Tribes as co-managers show
any compassion at all for the
health, safety and welfare of
the elk and humans in eastern
Skagit County? Why do they
expect the landowners to put
up with elk damages, provide
free feed and bury their dead
elk at landowners’ expense? Is
it because they are more wor-
ried about the next grant and
paycheck?
Why do we need to keep
asking the DFW and Tribes
to just obey the law? RCW
77.04.012 mandates that DFW
manage the elk to not infringe
on the rights of a private prop-
erty owner to control the own-
ers’ private property.
Why should local farmers
lose $10,000 to $15,000 a year
each from elk damaging their
summer and winter feed crops
and seed crops with no way pos-
sible to get compensation from
DFW or Tribes? Why should
the taxpayers of Skagit County
have to be saddled with the cost
of two sheriff elk-vehicle colli-
sions within last 50 days, one a
$55,000 vehicle totaled?
Why are the co-managers
DFW and Tribes allowing the
spread of elk hoof rot disease
in the Skagit and Acme agri-
culture valleys? Watching elk
suffer from hoof rot disease to
where they become too weak
to stand facing an agonizing
death. Can livestock owners
mismanage and treat their
livestock in the same manner
as the DFW and Tribes mis-
manage and treat elk? I don’t
think so, the public would be
outraged and livestock owners
would be charged with inhu-
mane animal cruelty.
Why are the co-managers
allowing elk damages to ag-
riculture crops, elk damages
to homeowners with gardens
and orchards, elk-vehicle col-
lisions and a dramatic increase
in elk populations in east
county to escalate? Why don’t
the DFW and Tribes just obey
state law RCW77.04.012?
Randy Good
Sedro Woolley, Wash.
well-crafted, com-
prehensive
estate
plan includes a will,
power of attorney, medical
directive and frequently a
trust. The estate plan should
dovetail with your business
documents to ensure the
business plan and estate
plan fly in formation. An
estate plan will save your
family not only time and
money down the road, but
also protect your familial
relationships. It will ensure
your farm businesses and
land pass onto the next gen-
eration the way you want.
Once you are ready to
work on your estate plan,
make sure to avoid these
common mistakes.
1. Mistake: The plan
doesn’t match asset own-
ership.
Solution: Review own-
ership and beneficiaries on
all of your assets. Your ac-
count ownership or real es-
tate titles may conflict with
distributions under your will
or trust. For example, if you
own a joint account with a
child, that account may pass
solely to that child, which
may not be your intent. Re-
view asset titles, account
ownership and beneficiary
designations to avoid a mis-
matched plan and family
conflict.
2. Mistake: Poor tax
planning.
Solution: Maximize tax
savings. As land continues
to rise in value, in order to
keep the farm in the family,
consider advanced income
and estate tax planning.
While folks in the 1990s fre-
quently created tax plans to
minimize federal estate tax-
es at 55 percent on estates
exceeding $600,000, feder-
al laws currently allow you
to transfer $5.49 million to
someone other than a spouse
free of federal estate tax. If
the estate exceeds $5.49
million, there is a 40 percent
tax. A married couple can
create a plan to pass on al-
most $11 million estate tax
free to their families.
In contrast, Oregon taxes
estates that exceed $1 mil-
lion and transfer to some-
one other than a spouse
on a sliding scale of 10-16
percent. However, Oregon
also has the Oregon Natural
Resource Credit (“ONRC”)
that farmers can take advan-
tage of to keep the farm in
the family. The ONRC is an
estate tax credit on Oregon
farms that meet the follow-
ing requirements:
1. The adjusted gross es-
tate is under $15 million.
2. ONRC Property ex-
ceeds 50 percent of the ad-
justed gross estate.
3. ONRC Property was
operated for five of the last
eight years before death by
the decedent or decedent’s
family member.
Guest
comment
Maria C.
Schmidlkofer
4. ONRC Property is
inherited by the decedent’s
family and continues to be
used to farm for five of the
eight years following death.
5. The ONRC is limited
to $7.5 million of ONRC
Property.
Aside from estate tax-
es, capital gains on the sale
of farm property have in-
creased. Analyze potential
estate and income taxes
with your attorney and CPA
to determine the best way to
reduce taxes for you and the
next generation.
3. Mistake: Failing to
address family dynamics.
Solution: Work through
potential family issues in ad-
vance. If one child is inher-
iting the farm, tell the other
children and explain why.
Have an honest and open di-
alogue about the succession
and your goals. Perhaps the
child worked on the farm
his or her whole life and this
is fair, albeit not equal. For
any potentially sticky situ-
ation, take the next step of
not just telling the family as
a group, but writing a letter
to your children explaining
your decision.
4. Mistake: Failing to
address disability.
Solution: Execute doc-
uments and instructions for
your family to have in the
event of emergency. Who
knows all the details of
your farm business? Who
is legally authorized to run
it if you had an emergency?
Would the contracts, leases,
supplies, payments and em-
ployees all run smoothly? If
one child leases part of your
land, was that done through
a handshake or a legally
binding document? Ensure
that you have documents in
place that allow someone
to step in to manage your
assets and make health care
decisions on your behalf in
the event of emergency.
5. Mistake: Failing to
update estate and business
plans.
Solution: Review your
plan regularly. The law is
complex and our situations
in farm and business are
unique. Life and the law
changes. Have an attorney
who regularly works with
farm and business succes-
sion review your plan reg-
ularly to ensure your plan
works.
Maria Schmidlkofer is
an attorney with Schwabe,
Williamson & Wyatt. She
focuses her practice on
estate planning and works
with farmers throughout the
Pacific Northwest to create
comprehensive succession
plans for their families. You
can reach her at mschmid@
schwabe.com or (503) 540-
4265.