Farm Estate and Succession Planning
Indiana Master Cattleman Class
November 28, 2017
By Cari B. Rincker, Esq.
Who I Am• Grew up on a beef cattle
farm in Shelbyville, Illinois– Advanced degrees in
animal science
• Past-Chair of the ABA, General Practice, Solo & Small Firm Division’s Agriculture Law Committee
• Client bases ranges from farmers, food entrepreneurs to small to mid-size agri-businesses
Overview
Different Processes
• Estate Planning
• Business Planning
• Succession Planning
Who, What, When, Where, How and How
Much?
Having Those Conversations
Mediation
Interplay
Estate Planning
Succession Planning
Business Planning
Estate Planning
• Estate planning is the paper part of the farm estate planning process
• It is more than a Last Will and Testament, although that is one piece of the puzzle
Estate Planning
Trust(s)
Advanced Directives• Health Care Proxy
• Living Will
• Power of Attorney
Last Will and
Testament
Estate Planning
Last Will and Testament
• Who gets what when you die
• Also notes who is the executor of the estate
• If there are unemancipated children, then it should note who is the guardian of the children
• Testamentary trusts can be utilized
• Must be properly executed with 2 disinterested witnesses
Estate Planning
Advanced Directives
• Power of Attorney
• Health Care Proxy
• Living Will
• Burial Information
Estate Planning
Trusts
Revocable
Irrevocable
Business Planning
Sole Proprietorships
• Certificate of Assumed Name?
Partnerships
• Limited Partnerships
• General Partnerships
Limited Liability Companies
• Can be taxed as C-Corp or S-Corp
• Series LLC’s in some states
Corporations
• S-Corps
• C-Corps
• B-Corps
A final word on Business Planning: Prenuptial Agreements
The word “prenup” should not be taboo with farm families
Before getting married, farmers should speak to a matrimonial law to get an overview of how divorce may impact the family farm
• It’s one of the Big D’s
• Prenups can deviate from the law in different ways while protecting the security of both parties
Succession Planning
• Succession Planning is different concept
• It’s a plan to discuss how management responsibilities will get passed down from one generation to the next
Succession Planning
In some ways, the “estate plan” can be the easy part. The “succession plan” may be more difficult.
The “estate plan” and “business plan” need to be in alignment with the “succession plan”
Succession Planning
• The succession plan needs to be memorialized
• Who is willing to take over the management of the farm?
• What needs to take place so that person is properly trained?
Operations Manuals
An operations manual may be an invaluable tool to help train younger generations
Break down each of the operations step-by-step
Can be a useful reference manual
A Word on Planning
This can be a balance act taking into consideration the interests of all the parties involved
With estate, succession and business planning, the “goals” can change over time
• Think about the priorities
• Those priorities may change overtime
Who, What, When, Where, How and How Much?
Who
It is a mistake to think that farm estate and succession planning is only for the “older generation.”
It is a mistake to think that you need to be rich in order to get an estate plan.
Nearly every over the 18 can benefit from some type planning – even if it’s just a simple Last Will and Testament, Power of Attorney and Health Care Proxy
What
Farm estate, business and succession planning can be done in STAGES according to:
• Need
• Budget
• Time
There is no “one-size fits all” estate plan
When
Now is the time. Estate planning is so easy to put off. Afterall, “I’m not dying tomorrow, right?”
Now may not be the time to get the “perfect plan.” Get a plan and perfect it overtime.
If you have a plan in place, get it reviewed every 3 to 5 years.
How
This is not the time to use DIY form websites like LegalZoom.
Talk to an attorney. Heck, talk to a few.
Get recommendations. Ask your farm lawyer, financial advisor, accountant, extension specialists or agriculture organizations for recommendations.
How Much
This isn’t the time to “get a deal”
Carefully interview attorneys and find someone competent and experienced in farm family estate, business and/or success planning
Might need a combination of professional involved in the process
Having Those Conversations
• It’s paramount for farm families to have tough conversations with one another about the estate and succession plan
• There is never a “right” time.
• Holiday season can be a good time to have the needed conversations-better in person vs. the telephone
• Conversations must happen regularly
Mediation
Mediation can be an effective way to have those “tough conversations” among multi-generational farm families
Mediator are a neutral third-party who is there to facilitate a conversation
• Separate attorney(s) will be used to draft the documents
Please Stay in [email protected]
Illinois Office:301 N. Neil Street, Suite 400Champaign, IL 61820(217) 531-2179
Twitter: @CariRincker @RinckerLawwww.facebook.com/rinckerlawhttp://www.linkedin.com/in/caririnckerSnapchat + Periscope: CariRinckerIG: @CariRincker + @RinckerLawYouTube: /CariRincker