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 Touchcari@rinckerlaw.comwww.rinckerlaw.com

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