The Maple Tap Act: an opportunity too sweet to pass up in upstate New York

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By Matthew K. Pelkey

The Acer Access and Development Program, otherwise known as the Maple TAP Act, is a part of the federal 2014 Farm Bill enacted earlier this year which will provide USDA grants of up to $20 million per year over five years to maple producing states to encourage production and development of the maple industry. This is a competitive grant process between maple producing states.

The public policy justification behind this funding is that the United States is missing out on a large opportunity given the number of maple trees we have and the relatively low number of trees we are tapping. Canada, and more specifically Quebec, is capitalizing on 75% of worldwide production. The U.S. does not even break 20% of worldwide production.

The problem, and corresponding opportunity, is that Quebec utilizes 35% of available maple trees whereas the U.S., with 2 billion potential taps, only has a utilization rate of .38%. Given that we are currently importing 4 times as much maple syrup as we produce—there is a tremendous market opportunity presenting itself.

New York is particularly well suited to benefit from the Maple TAP Act given that we currently utilize about only 0.50% of maple trees and have the highest total potential taps of any maple producing state at approximately 300 million.

Maple

 Source of data and graph: Cornell University paper, Background Information and Justification for Reintroducing the Maple Tapping Access Program Act as part of the new Federal Stimulus Package.

With an available 300 million taps, there is a tremendous market opportunity in New York State alone. Indeed, if New York even utilizes a third of its available maple taps, the resulting economic impact would be tens of millions of dollars to farmers and the upstate economy.

According to U.S. Senator Charles Schumer’s office, the sponsor of the Maple TAP Act, the potential economic impact to upstate New York breaks down as follows:

  • In the North Country, the epicenter of New York’s maple industry, there are 70 million potential new taps, and the TAP Act could help bring in an additional $19 million in revenue per year.
  • In the Capital Region, there are 34.8 million potential new taps, and the TAP Act could help bring in an additional $10 million in revenue per year.
  • In the Western New York, there are 21.1 million potential new taps, and the TAP Act could help bring in an additional $6 million in revenue per year.
  • In the Rochester-Finger Lakes Region, there are 11.6 million potential new taps, and the TAP Act could help bring in an additional $3 million in revenue per year.
  • In the Southern Tier, there are 70.8 million potential new taps, and the TAP Act could help bring in an additional $22 million in revenue per year.
  • In Central New York, there are 45.5 million potential new taps, and the TAP Act could help bring in an additional $13 million in revenue per year.
  • In the Hudson Valley, there are 26.8 million potential new taps, and the TAP Act could help bring in an additional $8.7 million in revenue per year.

So where can this funding be used most effectively? Anecdotally, if you talk to current producers the biggest barrier to further production is access to land. Landowners, many of which are concerned that tapping their trees will compromise the quality of timber intended be subsequently harvested and sold, are hesitant to lease their properties to maple producers. New York State could, and quite frankly should, propose funding through the Maple TAP Act to encourage landowners to lease property to maple producers and increase access to these trees. Furthermore, focus should likewise be given to encouraging research, development and commercialization of new products from maple sap and syrup.

Asset Protection Planning

Written by Colligan Law on . Posted in Articles, News

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Inherited IRAs are available to bankruptcy creditors.

By Frederick J. Gawronski

The United States Supreme Court unanimously ruled on June 12, 2014 in Clark v Rameker, that non-spousal inherited IRAs are not exempt from a debtor’s estate in bankruptcy.

This case involved an IRA that petitioner Heidi-Heffron Clark inherited from her mother in 2001. Heidi received distributions from the IRA for 9 years. In 2010, Heidi and her husband filed for Chapter 7 bankruptcy. In the Wisconsin couple’s schedules, they listed Heidi’s inherited IRA as retirement funds and hence exempt from the reaches of creditors.

The Bankruptcy Trustee, Rameker and the couple’s creditors disagreed, claiming the funds from the inherited IRA were merely Heidi’s inheritance, thus becoming an asset of the bankruptcy estate and available to creditors.
Writing for the Court, Justice Sotomayor noted that the phrase “retirement funds” is not defined in the Bankruptcy Code, so a normal meaning must be applied to the term. The Court concluded that its ordinary meaning as ‘sums of money set aside for the day an individual stops working”. In the Court’s view, there are three characteristics differentiating inherited IRAs from retirement funds:

  1. The holder of an inherited IRA is prohibited from contributing additional money to the account;
  2. The holder of an inherited IRA is required to take mandatory withdrawals from the account without regard to the holder’s retirement; and
  3. The holder of an inherited IRA may withdraw the entire balance of the account at any time, use it for any purpose, all without penalty.

As indicated by the Court, the result is consistent with general debtor-creditor law and the Bankruptcy Code. Exempting a traditional, non-inherited IRA is to provide for the retirement needs of the debtors, even to the detriment of creditors. A non-spousal inherited IRA serves no such purpose.

PLANNING NOTE: The ruling only applies to the federal bankruptcy exemptions. There are several states which do protect these types of IRAs, including Florida and Texas. New York does not have such an exemption. And the exemption applies to the debtor’s location, not the person leaving the inheritance. Accordingly, those individuals with IRAs who want the balance of the money to be protected from their heirs’ creditors should designate a spendthrift trust as the beneficiary of the balance, not the heirs directly.