Legacy Project

5 Succession Planning Mistakes to Avoid

Fri, 28 Jul 2023 14:06:39 GMT

It’s time. You need to finally make your farm’s succession plan a priority. As you take a first or second or 20th step in the process, shoot to avoid some common landmines.

“Although there are a lot of scary stories out there about succession planning, there’s actually way more positive stories,” says Rena Striegel, president of Transition Point Business Advisors based in Des Moines, Iowa. “I encourage everyone to become one of those positive stories. Take that first step or break through the roadblocks so you can be one of those success stories.”

Listen in as Striegel discusses succession planning with Andrew McCrea on the Farming the Countryside podcast :

Here are the roadblocks Striegel sees farmers commonly face.

You engage only one professional.

“Our philosophy is a farm needs to have a collaborative team of professionals that helps them with the decisions and discussions around succession planning,” Striegel says.

This team can include a CPA, lawyer, business adviser, banker, insurance professional and others. By having all these viewpoints at the table, you ensure your plan is comprehensive and meets your goals.

“I personally do not believe any one professional can come up with a succession plan independent of the other professionals,” she adds. “We encourage farm families to work with their team to develop and implement their transition plan.”

Your plan is driven by tax implications.

Taxes, of course, are a big concern for farmers, especially with the new tax policies coming out of Washington, D.C.

“But if you do succession planning with the sole intention of reducing or eliminating taxes, you actually miss a lot of really valuable tools you could be utilizing if taxes were not the major goal,” Striegel says. “What we try to do with farm families is identify the true goal of the family. Almost always the goal isn’t: I want to transition in a tax-effective way. Most of the times it’s about making sure that my operation stays viable, multiple families can support themselves or the farm is going to be here for future generations.”

You ignore the elephants in the room.

Succession and transition discussions are stressful. Most of the time, they will include several topics you’d just rather not talk about.

“We don’t want to talk about someone dying,” Striegel says. “There’s a lot of things about these conversations that make people feel really uncomfortable. And so oftentimes, even families who communicate well tend to have a hard time being really open.”

If you fall into this category, Striegel suggests working with a mediator or facilitator to help ease the tension and encourage honest and focused communication.

You don’t draw lines between being a family and a business.

“The thing we have found that has really helped farm families is when we can separate the family dynamics from the business itself,” Striegel says. “We try to help families understand when conversations are business discussions versus family discussions.”

In having clear lines between family and business conversations and decisions, she says, you can remove some of the emotional pieces from the equation.

“When we separate those a little bit, it does make it easier for farm families to be able to communicate and make decisions together as a group,” Striegel says.

You procrastinate, procrastinate and then wait a little longer.

The worst option for farm families, Striegel says, is waiting until your farm or family is at a breaking point before seeking help. Don’t wait until a family member is threatening to leave the farm.

“Oftentimes when the family fractures, so does the farm,” she says. “If you think that you’re going to need help, it’s far better to seek that help out and bring those resources in to preserve your family relationships. Wherever you are, today is the day to start.”

Want to jumpstart your succession plan? The DIRTT Project by Transition Point Business Advisors is an all-inclusive guidance plan to help you transition your farm business. Learn more.

Farm Succession Planning an Ongoing, Educational Process

Fri, 13 Nov 2020 06:00:21 GMT

Farm succession planning is an ongoing, educational process

As Greg Dell reviews the three years he and his family have spent developing a succession plan for their Westminster, Md., farm, he remembers how overwhelmed everyone was by the process in the beginning.

“We were like, holy smokes, how are we ever going to be able to do this? It was more than we could wrap our heads around,” recalls Dell of the decision to participate in the Farm Journal Legacy Project as a case study family.

However, the Dells quickly learned that they simply needed to start the process and take it one step at a time to achieve the desired success.

The first step in any process is often the hardest, notes Farm Journal succession planning expert Kevin Spafford. But start you must, he encourages, if you want to see your farm survive and thrive in the years ahead.

Spafford says a comprehensive succession plan addresses a variety of factors, including generational transfer with provisions for an ownership transition. The plan should also include provisions for financial security, including each family member’s financial resources, retirement budget, buyout scenario and capital for the transition; leadership development for each management candidate; education, experience and mentor-based development; and provisions to mitigate the estate tax.

It’s important for farm families to understand that their plan is a living document that needs to be updated from time to time. “Life is full of change, challenge and opportunity, and a succession plan must be dynamic to remain relevant,” Spafford explains.

An evolving plan. The Dells have certainly learned that lesson. Some aspects of their plan have unfolded as the family had hoped; some have not.

Farm founders Donald and Leona Dell and their son Roger are retired from the farm, though they help out when needed. Roger’s brother, Greg, with support from his wife, Della, provides the leadership for the farm.

The family’s dairy operation is now owned and managed by Greg and Della’s son Gary and his wife, Crystal. Greg and Della’s youngest son, Douglas, is a full-time fireman and provides manpower as needed.

The one huge hole the family is still working through is the heartache of PROJECTlosing Greg and Della’s second son, Tommy, who was killed in a farm accident in 2010. Despite their loss, family members continue to work on their succession plan to build a future for the farm.

After graduating from high school this past spring, fourth-generation member Gregory went to work for a neighboring farmer to gain practical experience apart from his family. In addition, the Dells are developing an employment policy to stipulate job descriptions and responsibilities that reflect their goals and values.

Spafford is advising the Dells to remember that their succession plan also needs to take into consideration the strategic partners outside the family who provide much-needed support to the operation.

“Bankers, input suppliers and consultants all play a part in your success,” Spafford says. “They depend on your ability to continue farming, and they have a stake in the outcome.”

For more details about the Dell family’s succession planning journey and the tools that have been helpful along the way, visit www.farmjournallegacyproject.com/Dells

New Mexico State University Collaborates on $9.75 Million Grant to Study Bovine Respiratory Disease

Fri, 20 Nov 2020 05:33:37 GMT

CLOVIS, N.M., June 8 -- New Mexico State University issued the following news release:

New Mexico State University is partnering with Texas A&M and other universities across the country on a $9.75 million grant from the U.S. Department of Agriculture’s National Institute of Food and Agriculture to research bovine respiratory disease and how to reduce its prevalence in beef and dairy cattle.

NMSU’s Southern Great Plains Dairy Consortium, a Cooperative Extension Service program in Clovis aimed at ensuring long-term sustainability of New Mexico’s dairy industry, will play a key role in making this research a success.

“NMSU got involved in this research because of the consortium and we can use this resource as a wraparound tool for this grant,” said Robert Hagevoort, an Extension dairy specialist. “The consortium is a multi-state, multi-university, multi-disciplinary entity. We already have the tools in place for the teaching and extension side of this grant. By combining these with the research aspect of the grant, we are maximizing and leveraging the available resources that might not otherwise be available to NMSU or its students.”

Milton Thomas, professor of animal and range sciences, and Tim Ross, department head of animal and range sciences, are co-principal investigators on the research.

Bovine respiratory disease is recognized as one of the leading causes of death in beef and dairy cattle, resulting in significant economic loss for farmers and ranchers, Hagevoort said. Typically, it is the calves that are affected by the disease.

“We have good medication to treat the disease, " Hagevoort said, “but we don’t know if there is a subsequent effect that could influence their performance down the road after they are cured and go on to live their lives.”,” he said.

Researchers plan on finding 500 affected and 500 healthy dairy heifers in New Mexico and monitoring them from birth to calving and their first lactation. Hagevoort said there are indications that the disease could be genetic. Through this research, they will try to identify genetic markers for cattle that might be predisposed to the disease.

The data will be used to develop diagnostic tests and genetic selection tools to identify animals that are resistant to the disease. Animal welfare will also be assessed.

Scientists will already have contacts with dairies in New Mexico that are participating in the consortium that may be willing to participate in the project.

On the teaching side of the consortium, students from participating universities attend a six-week summer program that gives them hands-on experience learning large herd dairy management.

Hagevoort said the consortium’s goals fit right in with what is being accomplished through the grant.

“We are already talking about the bovine respiratory disease through the consortium,” Hagevoort said. “Now, we can pass along the information we find through this research and make that an emphasis of what we teach.”

Scientists from the University of California-Davis, Colorado State University, the University of Missouri, Washington State University and the U.S. Department of Agriculture’s Agricultural Research Service are also studying BRD in their respective regions through this grant.

NCBA President Values Multi Generational Ranching

Fri, 13 Nov 2020 05:57:15 GMT

This video was produced by the Montana Stock Growers Association

Develop Your Leadership Skills to Benefit Ag

Fri, 23 Sep 2022 21:32:10 GMT

Jeanne Bernick , Top Producer Crops & Issues Editor

Lack of leadership may be the single biggest void in today’s agricultural operations, says Kevin Spafford, Farm Journal columnist and founder of Legacy by Design, a farm succession planning firm.

Listen to Spafford expand on the importance of leadership:

For More Information
On-Farm Leadership Critical to Success

You can email Jeanne Bernick at jbernick@farmjournal.com .

3 Reasons Your Family Could End Up in Court (And How to Avoid It)

Mon, 24 Jul 2023 15:59:17 GMT

The major causes can all be avoided with smart estate planning

You’ve heard the horror stories. The ones about farm families who spend months in court fighting over assets. The result? A destroyed business and fractured family.

Why does this situation play out over and over? After studying numerous family farm cases Kitt Tovar Jensen, staff attorney at Iowa State University’s Center for Agricultural Law and Taxation , points to three key reasons:

Disappointed beneficiaries. Heirs are surprised by what they find in their family’s will. Often assets were divided differently than they expected or unspoken agreements were not followed.
A failure to plan. This can include not having a plan at all or not finding the correct professionals to guide you to create the best plan for your farm and family.
Life events. People often don’t account for big live events, such as marriage, divorce, births, disability, death or disagreements.

By knowing these common hurdles, you can plan to avoid them. “Don’t wait to make or update plans,” Jensen says. “You and your family need to engage in family discussions before it’s too late.”

For instance, Jensen suggests updating your will when life circumstances or goals change. Then tell your family members about your desires – ideally at a family meeting.

“If you adjust your will due to new goals, write your reasoning for the changes in the updated will,” she says.

Also, be mindful of the beneficiary designations in your estate planning documents and assets. The language and defaults for these can vary by state.

“The No. 1 mistake is not naming a beneficiary,” Jensen says. “Check yearly to ensure beneficiary designations are up to date. Also, make sure everyone’s name is spelled correctly.”

Above all, Jensen says communication is vital in avoiding litigation. If this is difficult in your family, consider working with a trained mediator or other professionals.

“The investment of good counsel is minimal compared to the cost of mistakes,” she says. “This is not the place to cut corners.”

Ready to start your plan? Learn what “ not dead yet documents ” you should have in place now.