Managing for Today and Tomorrow Business, Succession, Retirement and Estate Planning for Farm and Ranch Women Managing for Today and Tomorrow Succession Planning Session Three Block three

Managing for Today and Tomorrow Business, Succession, Retirement and Estate Planning for Farm and Ranch Women Objectives SWOT Analysis – Uses of SWOT analysis Goals and SWOT SWOT exercise Overcoming barriers to successful transition plan – The D’s Equal vs Fair treatment of contributors

Managing for Today and Tomorrow Business, Succession, Retirement and Estate Planning for Farm and Ranch Women Strengths, Weaknesses, Opportunities and Threats SWOT Analysis Strengths Weaknesses Opportunities Threats Uses of the SWOT

Managing for Today and Tomorrow Business, Succession, Retirement and Estate Planning for Farm and Ranch Women SWOT Analysis Strengths, Weaknesses, Opportunities and Threats Hand out and Reference Material: SWOT Analysis: A tool for making better business decisions USDA-RMA, August, 2008 Farm-Risk-Plans.usda.gov

Managing for Today and Tomorrow Business, Succession, Retirement and Estate Planning for Farm and Ranch Women Risk and Barriers To Successful Transition Plans

Managing for Today and Tomorrow Business, Succession, Retirement and Estate Planning for Farm and Ranch Women ambitious low experience new ideas no time horizon time to recover from mistakes have little to lose Risk Profiles Barriers to Successful Transition Plans YOUNGMATURE 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 Business, Succession, Retirement and Estate Planning for Farm and Ranch Women Death Disability Disaster Divorce Disagreement Important D’s

Managing for Today and Tomorrow Business, Succession, Retirement and Estate Planning for Farm and Ranch Women Death Divorce Disability Disagreement Disaster Dissolution Important D’s by Generation YOUNGMATURE

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

Managing for Today and Tomorrow Business, Succession, Retirement and Estate 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 Areas to Talk About 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 Business, Succession, Retirement and Estate 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 Business, Succession, Retirement and Estate 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 Do they want to continue Communicate the transition plan Put the transition plan into action

Managing for Today and Tomorrow Business, Succession, Retirement and Estate Planning for Farm and Ranch Women Some Tools to Consider 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 heirs

Managing for Today and Tomorrow Business, Succession, Retirement and Estate Planning for Farm and Ranch Women Some Tools to Consider 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 sell 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 is off-farm heirs sell

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