Don’t die at the wrong time!

Farm Forum

Two things in life are certain: Death and taxes. But if you die at the “wrong time,” you might also create lots of problems for your heirs at your local Farm Service Agency (FSA) office.

At least that’s been the experience for two Kansas women, who lost their mother, Margie McKee, on March 27, 2011. McKee, like many landowners who plan for their eventual deaths, arranged to have her property owned by “The Margie A. McKee Revocable Trust.” Her daughters, Marcy Kastens and Tanis Lieurance, were named as trustees upon her death.

About three-quarters of the land owned by the trust is farmland, including 384 acres of farmable cropland in Harper County. McKee planted hard red winter wheat, but the county was hit by a drought and the crop suffered considerable losses in 2011.

McKee was protected – or so she thought – because she had purchased crop insurance. After her death, her daughters also enrolled in USDA’s Supplemental Revenue Assistance Payment (SURE) program, which requires eligible participants to carry crop insurance and have a qualifying loss of at least 10 percent.

McKee’s farm appeared to have met all of the requirements. But McKee died on March 27, 2011 at the age of 77. And that’s when her planning went awry and SURE payments valued at about $23,000 were eventually denied.

After burying their mother, the daughters, through their attorney, contacted T.C. Dawson, the County Executive Director at the Harper County FSA, office to notify him of McKee’s death. In a letter back to the attorney, the FSA Director noted that he needed a death certificate, recorded deeds and a tax identification number to replace her social security number on the trust. According to FSA, the trust changed from a social security number to an Employer Identification Number (EIN) in July of 2011, after the deeds and the new EIN were registered at FSA.

But when the daughters submitted their 2011 SURE application before the sign-up period ended on June 7, 2013, they were denied by the county FSA Committee because “the incorrect ID was insured.” That’s because McKee’s Risk Management Agency (RMA) numbers didn’t match the FSA’s new EIN registered at FSA. The insurance coverage was in McKee’s name and social security number until it was transferred for the 2012 crop year.

“The insurance company explained that they could not process a change to the policy for wheat after September 30, 2010,” Kastens said. “Since Mom died on March 27, 2011, there was no way to modify the insurance records to match the FSA records. The policy had already been issued and mailed and our Mom actually received the policy before she died.”

Thus far, FSA has been reluctant to show flexibility on the identification numbers.

“If my Mom would not have died, and if we would have not complied with Mr. Dawson’s request to obtain a tax identification number, we would not be having this problem,” wrote McKee’s daughter, Marcy Kastens, in a letter to Sen. Jerry Moran, R-Kan., calling attention to this case. “I have to wonder if my sister and I were men, and if we were wealthy, if we would be having this same problem.”

Kastens said their lawyer met on Sept. 11 with the Harper County FSA committee, Mr. Dawson and Rick Case, the FSA District Director. Kastens said Mr. Case told her lawyer, “This same situation had been a problem for four years in his region of Kansas,” and recommended the family sue the insurance company.

But in a separate letter to the FSA Committee, the insurance company offered another solution, pointing to federal handbooks issued by RMA and FSA that note both agencies have procedures for dealing with such conflicts.

“As a result, FSA should be able to process the SURE payment at issue without any changes to the RMA data,” wrote Dan DeLano, Division Manager for Rain and Hail LLC, thereby passing the case back to the government officials.

An RMA spokesperson confirmed that there are procedures for transferring the right to an indemnity to an estate if a death occurs during the insurance period, and for cancelling and making a new application (for an estate or other party in place of a deceased person) in advance of an upcoming sales closing date.

But the government has made no further moves to resolve the case. For now, the two sisters have decided to appeal their case to the national level. Both said they know this is a strictly business transaction, but said it’s hard to describe the personal toll it has taken on their families.

At one point, Kastens said, FSA’s Dawson explained to her that that her mother “just died at the wrong time.” Dawson denies “anyone in this office ever made that statement.”