1. Estate and Succession Planning for Farm and Family Businesses Robert Moore Wright & Moore Law Co. LPA Delaware, Ohio

2. What is Succession Planning? Estate Planning Business Planning Family Goals Succession Planning

3. Estate Planning Documents 1.General (Durable) Power of Attorney – identifies who will make financial decisions for you if you cannot make them for yourself 2.Health Care Power of Attorney – identifies who will make health care decisions for you if you cannot make them for yourself 3.Living Will – end of life directive 4.Will or Trust – directs how and to whom assets will be directed upon your death

4. Will or Trust? Will Tends to be a more simple document Adequate for most common estates Does not avoid probate Trust Significantly more complex than will Allows for more complex estate/succession planning Avoids probate and is private Typically use trusts for larger, more complext estate/succession plans like family farms and family businesses

5. Deciding Between Will and Trust Will PlanIssueTrust Plan Probate is PublicPrivacyTrust is Private SimpleComplexity of Estate PlanComplex Outright Distribution is OKConcerns about HeirsKeep in Trust to Prevent Waste Adequate if all children treated the same for inheritance Children with Different Interests (Farm Heir and Non-Farm Heir) Make different provisions for children based on interest in Little or NoneSurviving Spouse Remarriage Concerns Some or Significant Do Not Mind ProbateProbateAvoid Probate Little or No ConcernEstate TaxesMaximize Savings Keep to minimumLegal FeesPay what it takes

6. Example Scenario Bill farms with his two sons Farming operation is in a partnership with two sons Bill owns substantial farmland Bill is married to Jane, second marriage Most of Bill’s wealth is in farming partnership and land. Some cash, investments and life insurance Bill’s goals are to take care of his wife without interfering with sons’ ability to continue farming operation and avoid probate

7. Scenario Solution HusbandWife Husband’s Trust (sons are trustees) Husband’s Trust (sons are trustees) Income for Wife’s life Wife’s Trust Wife’s Trust Cash, life insurance, personal assets Farm land Sons Farming Partnership

8. Scenario Solution HusbandWife Husband’s Trust (sons are trustees) Husband’s Trust (sons are trustees) Income for Wife’s life Wife’s Trust Wife’s Trust Cash, life insurance, personal assets Farm land Sons Farming Partnership Goals Accomplished: 1.Wife receives money immediately at death 2.Sons receive farming assets immediately upon death 3.Wife receives rent from land for her life 4.Sons are able to farm land at a reasonable rate 5.Sons manage land in trust 6.Avoids probate

9. Avoiding Probate 9 ASSETS BENEFICIARIES Will Probate Will Probate TRUST Probate Non-Probate TOD, POD, or Survivorship

10. USE OF LLC IN SUCCESSION PLAN Limited Liability Company Provides significant liability protection to owners of the LLC Separates personal assets from the liability created by business assets Provides set of rules for co-owners of farms and businesses to resolve disagreements or disputes Excellent tool in succession plans to hold family land Allows for flexibility in taxation structure

11. LLC’s in Succession Planning Farming Operation or Business LLC Real Estate LLC Personal Assets Personal Assets Liability Barrier

12. LLCs To Hold Family Land Jointly owned land risks partition Anyone with their name on a deed can force the other owners to buy them out of force the sale of the land at Sheriff’s sale Consider placing jointly owned land into an LLC Owners of the LLC do not have partition rights Before any ownership can go outside the family, the other family members get a chance to buy it Can discount purchase price, 10%-30% Buyer can pay over a number of years, 10-20 years LLC can be passed down through generations Add liability protection Can reduce self-employment tax

13. Tools Used in Estate/Succession Planning On-farm/ Off-farm provisions Right of First Refusals Options to buy specific assets Purchases at discounted price Require land leased to farming heir Sever mineral rights/surface rights Compensating for previous gifts Forgiving debt LLCs Shared appreciation clause Equalization of inheritance Conditions of inheritance Allocation of debt among heirs Allocation of estate taxes Life Insurance Aggressive planning trusts Irrevocable Trusts Discretion with Trustees There is a solution for you!

14. Questions? Robert Moore Wright & Moore Law Co. LPA 92 N. Sandusky St. #300 Delaware, Ohio 43015 740-990-0751 rmoore@ohiofarmlaw.com