Rawhide Trust Helps Ag Producers Slow Down
When it comes to farming and ranching, a farmer's work is never done. Thanks to their generosity toward SDSU, Allen and Becky Walth are finally seizing the chance to slow down.
Allen and Becky, who farm and ranch near the Missouri River, credit the rawhide trust for allowing them the capital to semi-retire without seeing a large portion of their lifetime of work make its way to the IRS.
"We don't know if we're going to really retire," the Walths said, "but we plan to slow down by renting out most of the farm/ranch since neither of our two children plan on returning and taking over the operation."
Allen and Becky have a diversified farm/ranch where they grow corn, soybeans, wheat, and hay, as well as running a 350-head cow/calf operation.
The Walth place is located in north central South Dakota. Allen's grandfather bought some of the land in 1917, and it's been in the family ever since.
Looking for a way to dial back their work on the farm and still support themselves, the Walths met with the SDSU Foundation. The Office of Gift Planning introduced them to the rawhide trust, a way to turn tangible personal property into income.
The Walths deeded livestock to the trust and plan on deeding grain in the future. The trust, in turn, sold the livestock, bypassing the large hit the Walths would have taken on their federal taxes.
"It's a big tax savings if you liquidate a lot of your farm assets without having to give a large portion to the government and still providing a source of retirement income," Allen said.
The trust will pay the Walths until they pass and then pay their two children for another 20 years. Called a charitable remainder trust, the remainder will go to SDSU.
The largest percentage will go to the College of Agriculture, Food and Environmental Sciences, where Allen got his degree in animal science. A portion will also go to the College of Education and Human Sciences in honor of Becky's degree in home economics.
Other recipients will be the College of Pharmacy and Allied Health Professions to honor their daughter, a pharmacy graduate, and to the Department of Agricultural and Biosystems Engineering to honor their son, an ag engineering graduate.
Allen said the process for setting up the trust seemed overwhelming at first, but really wasn't that difficult. Since rawhide trusts were relatively new at the time, the Walths' attorney was not familiar with how to set it up.
That's where the Office of Gift Planning came in, serving as a technical resource. With their rawhide trust in place, the Walths have some traveling on their radar.
"We'll never fully retire, but slow down," the Walths said. "Do some traveling and attend as many SDSU festivities as possible."