A goal of estate planning, he says, is to “make sure we get our assets to those we want to have them, with minimum shrinkage due to costs, taxes, or other expenses, and to do it with maximum security — to know that all the necessary documents are in force, that we’ve established a way to pay for expenses, and that we’ve tried to reduce those expenses as much as possible.”

Unfortunately, Hughes says, “Many successful farm families often do a poor job of estate planning.”

Some “extremely important” documents everyone needs include a properly drafted, valid will, a durable power of attorney, a durable power of attorney for health care, and a health care directive.

“This should involve a team of advisors: your attorney, your accountant, your estate planner, and your trust officer, if you have a trust.”

A will is important, Hughes says, to determine how property you own will pass to someone else, but it needs to be properly drawn, witnessed, and the signatures notarized.

“You need to be aware, too, that a beneficiary designation, such as for a retirement plan or life insurance, will override a designation in your will. So you need to be sure that you frequently review beneficiary designations and update them so these assets will go where you want them to go.

“If you die without a will, the state of Mississippi has one for you through its intestacy law. If you leave your estate to chance or to the state, there’s a good chance things aren’t going to turn out the way you intended. It can get very complicated — and it can become even more complicated if there are surviving minor children or grandchildren.”

While tax planning “is not as big an issue as it was two years ago,” Hughes says, “two years from now it could well be a bigger issue.

“Tax laws are constantly changing. In 2000, the estate tax exemption was $675,000. In 2001, a law was passed that Congress said would eventually wipe out the estate tax. But it was only a 10-year law, and even though the estate tax went to zero in 2010 [to the benefit of George Steinbrenner’s family], in December 2010 they passed a law to set the exemption at $5 million.

“But, that’s only for two years. If Congress fails to act before its expiration, it will revert to just $1 million in 2013.”

Hughes quoted a memo from a Jackson, Miss., law firm:

“After three months of deliberation, the Joint Select Committee on Deficit Reduction, the ‘Super Committee’, has failed to develop any proposals for reducing the nation’s debt. This failure perhaps increases the possibility that the estate and gift tax exemptions will return to $1 million Jan. 1, 2013 as currently scheduled. Further, Democrat Rep. Jim McDermott has introduced the Sensible Estate Tax Act of 2011. This proposed legislation would raise the estate tax rate to 55 percent and decrease the gift and estate tax exemption to $1 million as early as Jan. 2012. While the level of support for Rep. McDermott’s proposed legislation is unclear, both the introduced legislation and the Super Committee’s failure highlight the need to act now so as to take advantage of the increased gift and estate tax opportunities.”

While the McDermott bill has only been introduced and isn’t law, Hughes says, “it nevertheless shows the way some in Congress are thinking” and emphasizes the uncertainty of tax law.

The estate tax exemption today is $5 million. A wife can take her husband’s $5 million exclusion and add her own $5 million exclusion, thus protecting $10 million in assets, he says.

“But will it exist that way a year from now? Who knows? Good planning now can equal big savings later.”