Managing for Today and Tomorrow Succession, Business, Estate, and Retirement Planning for Farm and Ranch Women Managing for Today and Tomorrow Succession Planning Part Three Analyze Your Situation

Managing for Today and Tomorrow Succession, Business, Estate, and Retirement Planning for Farm and Ranch Women Three Important Considerations SWOT Analysis – Strengths, Weaknesses, Opportunities and Threats Risk and Barriers to Succession – The 5 D’s : Death, Disagreement, Divorce, Disaster, and Disability Fair vs. Equal – Valuing contributions and determining priorities for off-farm and on-farm heirs or other business partners

Managing for Today and Tomorrow Succession, Business, Estate, and Retirement Planning for Farm and Ranch Women SWOT Analysis Evaluate –Strengths –Weaknesses –Opportunities –Threats Explore –Insights into your business –Decisions points –New ideas from family, partners and advisors

Managing for Today and Tomorrow Succession, Business, Estate, and Retirement Planning for Farm and Ranch Women Risk Profiles Young ambitious low experience new ideas no time horizon time to recover from mistakes have little to lose Mature risk conscientious lots of experience established style sees a horizon with a setting sun little or no time to recover if losses occur have a lot to lose

Managing for Today and Tomorrow Succession, Business, Estate, and Retirement Planning for Farm and Ranch Women Death Divorce Disability Disagreement Disaster The 5 D’s by Generation YOUNG MATURE

Managing for Today and Tomorrow Succession, Business, Estate, and Retirement Planning for Farm and Ranch Women Techniques to Manage Risk Avoid Reduce Retain Shift Self Insure

Managing for Today and Tomorrow Succession, Business, Estate, and Retirement Planning for Farm and Ranch Women Insurance – Liability/peril – Life – Disability – Crop & Livestock Insurance Contracts – Leases – Production agreements – Prenuptials – Market sales contracts – Estate & retirement plans Asset Management – How property is titled Communications – Between family members/generations – Business associates Modified behaviors – Business vs lifestyle – Separating business and family life Financial records – Balance sheet – Cash flow – Income statement – Emergency cash funds

Managing for Today and Tomorrow Succession, Business, Estate, and Retirement Planning for Farm and Ranch Women Frequency of Events Severity of Impact FewMany Low High Avoid Retain Self Insure Reduce Retain Self Insure Reduce Shift

Managing for Today and Tomorrow Succession, Business, Estate, and Retirement Planning for Farm and Ranch Women Fair vs. Equal Issues of fairness One perspective on fair vs. equal Wills Understand how assets are transferred in probate Identify farm or ranch heirs/managers/partners Develop a succession plan Put the succession plan into action

Managing for Today and Tomorrow Succession, Business, Estate, and Retirement Planning for Farm and Ranch Women Tools to Increase Fairness Life Insurance –Its affordable, life insurance is purchased for off-farm heirs –On-farm heirs purchase life insurance on parents’ lives for buying out siblings Partnership, LLC, Corporation –On-farm heir controls/manages the operation –All siblings share ownership –Operating entity owned by on-farm heir and land entity owned by all hei rs

Managing for Today and Tomorrow Succession, Business, Estate, and Retirement Planning for Farm and Ranch Women Tools to Increase Fairness Off farm heirs understand and agree to inherit less, in order to transition a viable farm or ranch business Shared appreciation agreement –If the on-farm heir sells real estate within a specified time, off-farm heirs share in appreciation Real Estate divided –Long term leases –On farm heir has first right of refusal if off-farm heirs sell

Managing for Today and Tomorrow Succession, Business, Estate, and Retirement Planning for Farm and Ranch Women Checking Your Progress At this point can you answer yes to the following questions? Are the parents or older generation ready for a partner? Is the child or non-related younger generation committed to farming? Is the business large enough? Can you live and work together? Are the non farming children supportive ?