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Leaving aside the fact that Sam Walton was an American and so his assets had no "deemed disposition" upon his death: Walmart is a publicly traded company, so if

Leaving aside the fact that Sam Walton was an American and so his assets had no "deemed disposition" upon his death: Walmart is a publicly traded company, so if his heirs inherited a few % less of the company it wouldn't make a big difference. In the "family farm" (and "family business") scenario, we're talking about private companies -- whether incorporated or not, all the owners are related. If part of such a company needs to be sold off to pay taxes, it would presumably be sold to a someone at arm's length, which would fundamentally change the business structure -- just like running a startup with VC investors is different from running a bootstrapped startup.

kelseyfrog 2y ago
Couldn't family farms plan around such an event occurring, either by having the cash on hand to pay taxes or through some sort of insurance?
- bluGill 2y ago
  Where does that cash come from? Family farms often are worth millions on paper, but it is all land. There typically isn't that cash. And the way tax laws and inflation works you are discouraged to not keep that kind of cash on hand - there is no place to save it that keeps pace with inflation after taxes that is low risk (If everyone tried this you will hear horror stories about someone who puts the money aside and then the parents die so it is needed but the market is down and so they lost money)
  - deleted 2y ago
    [deleted]
  - kelseyfrog 2y ago
    Thank you. I feel like I understand the structure better now
- NoMoreNicksLeft 2y ago
  In the particular example of a "family farm" (mostly extinct since the 1970s in any meaningful way), profit margins were always slim. Furthermore, life insurance for grandpa isn't likely to cover the difference... the real estate value of smallholdings is positively astronomical in many cases (acreage alone does this, but it's often high quality land in many ways). There's not many plausible routes to "paying the millions-dollar death tax so that developers don't turn the cornfield into a suburb" in such scenarios. Mostly moot though, this all played out and was over before most of us were born. I suppose there are gigantic 20,000 operations that "won't stay in the family"... but those farmers: 1. Aren't really living on the same piece of land that they farm 2. Having to sell off 1500 acres to pay the tax bill doesn't much affect their operation except that it's slightly smaller 3. Have someone custom combine it anyway... they're basically a management company that hires a bunch of contractors 4. Generally are incorporated in such a way that sole ownership hasn't been an issue since great-great-granpa died back in 1961 Family farms are, at this point, largely mythological.

kelseyfrog 2y ago

Couldn't family farms plan around such an event occurring, either by having the cash on hand to pay taxes or through some sort of insurance?

bluGill 2y ago
Where does that cash come from? Family farms often are worth millions on paper, but it is all land. There typically isn't that cash. And the way tax laws and inflation works you are discouraged to not keep that kind of cash on hand - there is no place to save it that keeps pace with inflation after taxes that is low risk (If everyone tried this you will hear horror stories about someone who puts the money aside and then the parents die so it is needed but the market is down and so they lost money)
- deleted 2y ago
  [deleted]
- kelseyfrog 2y ago
  Thank you. I feel like I understand the structure better now
NoMoreNicksLeft 2y ago
In the particular example of a "family farm" (mostly extinct since the 1970s in any meaningful way), profit margins were always slim. Furthermore, life insurance for grandpa isn't likely to cover the difference... the real estate value of smallholdings is positively astronomical in many cases (acreage alone does this, but it's often high quality land in many ways). There's not many plausible routes to "paying the millions-dollar death tax so that developers don't turn the cornfield into a suburb" in such scenarios. Mostly moot though, this all played out and was over before most of us were born. I suppose there are gigantic 20,000 operations that "won't stay in the family"... but those farmers: 1. Aren't really living on the same piece of land that they farm 2. Having to sell off 1500 acres to pay the tax bill doesn't much affect their operation except that it's slightly smaller 3. Have someone custom combine it anyway... they're basically a management company that hires a bunch of contractors 4. Generally are incorporated in such a way that sole ownership hasn't been an issue since great-great-granpa died back in 1961 Family farms are, at this point, largely mythological.