Impact of New England Transfer the Farm Program Workshops Bob Parsons University of Vermont Mike Sciabarrasi University of Vermont Presented at the 2009 National Extension Risk Management Education Conference Reno, NV March 31-April 1, 2009

Demand – Program Addressing Regional Education Needs on Farm Transfer/Transition Issues All New England States Aging farmers on small farms Complicated by high real estate values Regional concern to preserve farmland Complex – 2 different issues –Estate Planning –Business transition

Result: Regionally Supported Project Generously funded by the Northeast Center for Risk Mgmt Education Combined effort and cooperation: Extension of Connecticut, Maine, New Hampshire, and Rhode Island Land For Good, Land Link – Vermont, and Maine Cooperating attorneys Bottom line: One state could not do the program alone!

What Did We Do ? Conduct 26 workshops for 792 participants in 6 New England states –15 TTFI for 511 –9 TTFII for 244 –2 TTF II for 37 Met individually with 85 farm families Provided financial support for 21 families

Workshop Agenda for “Transfer The Farm I” Workshop Communication and setting goals Retirement, estate & business basics Nuts & bolts – Legal aspects & methods Creative alternatives –Land Link, Conservation Easements Farm panel – their experience 1 day, 9-3:30

Retirement & Transfer Basics View of the issues and considerations Retirement planning Health and income needs Implication of taxes Methods of transferring assets Business organizations Business transitions

Legal Aspects of Transfers Attorney is essential Opportunity for free legal questions! Probate, estate, and taxes Wills, inheritance, & heirs Protecting assets Conflict of interest between generations! Leave lots of time for Questions!

First Hand Experience Farmer panel gives hope and confidence that transfer/transition plan can be achieved Folks willing to openly discuss Get multiple views – Parent, child, in-law Get success and horror stories Gives courage to move forward

Transfer The Farm II – Farmers Wanting Business Transition Retirement income Medicaid and farm ownership Compare business organizations and trusts Ingredients of a business agreement Conclude with a decision case

Medicaid and Health Issues Long term care “scares the hell out of folks” –Will we have to sell the farm to pay the home? Medicaid complicated and changing yearly Long term care insurance? Affordable? Issue garners great attention!

Reference Material for Workshop Checklist for ingredients of LLC agreement Limitations of LLC –Does it provide limited liability? –Preventing “piercing the veil” Checklist of post-LLC tasks

Key Points of Interest on LLC Key elements folks want to know: –Protect against divorce –Maintaining and handing over control –Including non-farm heirs but no control Passing ownership through the LLC Does it really protect against liability?

So What Were the Results??? Sex: 53% male, 47% female Age well distributed: – 10% 65 – 30% age 56-65, 34% age % sole proprietor, 19% partnerships –20% LLC, Trust, Corp 71% have retirement account

What Done in Previous 5 Yrs? 13% had done NOTHING 27% written or updated a will 33% attended another workshop 69% discussed with family 39% met with professional on issues 32% had met with ag professional 13% altered business to include children

People Liked the Programs 95% Satisfied with the workshops 98% Satisfied with workshop organization Family Communication turned out highest rated section Legal Aspects 2 nd – folks liked the lawyers! Creative solutions least popular

Workshop Increased Understanding of the Issues… Communication - from 30% to 88% Retirement planning - from 25% to 75% Business transition- from 16% to 77% Estate planning -from 20% to 80% Health and Medicaid - 5% to 85% Business Agreements – 9% to 90% Note: on a scale of 1 to 5, answer 4 or 5

Follow-up Program with Workshop Participants Set up farm visit with farmers Offer aid for professionals (lawyer, acc’t) –Provide $150 stipend Met with 85 families –Across New England –By 5 participating extension and 2 non-profit collaborators

Follow-up Meetings Each situation was unique Topics widely varying Met at home or extension office Offered follow up professional assistance –Odd – only 21% took professional offer! –Others did use professional help –Some did not move forward

What Have Participants Done Since Workshop? Survey – 56% return 72% files or updated will 70% have reviewed deeds 62% have discussed process with family 47% had determined basis with tax advisor 18% set up planning entity (LLC, trust)

So What Have We Learned? Issue “ain’t goin’ away” as farmers average age gets older Workshops work to get issues covered Clientele want one-on-one consulting –Fear of not knowing exactly what to do Greater need “out there” but not reached –Lenders, others identify folks needing help

Issues for Extension Declining Extension Resources –Can we put time into one-on-one? –How much effort to one family? Declining meeting attendance – do different? Addressing those in need but not reached –Innovative thinking needed –Technology - but older folks don’t use internet How to include professionals/others?

Questions? Thank You!