Sustaining the Legacy: Management and Wealth Transfer Planning for Ranches

1. Sustaining the Legacy:Management and Wealth Transfer Planning for Ranches Adele Harty South Dakota Cooperative Extension Service Randy McKee McKee Companies

2. Background • SASSY (Sustainable Annie’s Systems in South Dakota for Years to Come) • Annie’s Project II • 6 sessions • Topics more participant driven • Additional component of Family Business Meeting • Groups wanted Estate Planning for this portion • Led to Sustaining the Legacy Workbook • Collaboration with Randy McKee and McKee Companies

3. Sustaining the Legacy • Developed by South Dakota State University and Texas A&M University-Kingsville • Third workbook in a series of three for overall ranch planning.

4. Sustaining the Legacy • Family Business Meetings • 3 sessions, each 3 hours long • All family members invited • Followed activities outlined in workbook

5. Agenda

6. Sustaining the Legacy • Session 1 • Introduction to the course • Inventory of the Ranch’s People • Colors activity for personalities • Family Management and Ownership Activity

7. Personalities

8. Personalities

9. Family, Management, Ownership

10. Sustaining the Legacy • Session 1 • Inventory of the Ranch’s wealth • Homework • Complete Phase 1 Worksheets

11. Homework

12. Homework

13. Homework

14. Homework

15. Sustaining the Legacy • Session 2 • Estate Planner • “Estate Planner in a Box”

16. The best tools available to help you produce success in your plan!

17. Randy McKee • Nationally-recognized estate planner • Specializes in ag estate planning • Family firm serving ag families and businesses for 36 years • Creator of state-of-the-art systems

19. Families around the country have found that using Estate Planner In A Box™ has been the one indispensible component in their estate planning task. It’s the pure education part of the process – providing you objective information on every element of estate planning. All for less cost than one hour with a good estate planning attorney!

20. Where did EPIB come from? • It was becoming harder to serve outlying areas. • The demand for good estate planning information was growing. • The ability of ag operators to use better technology • Strategies that work in every state • A real need for the product

21. What does EPIB include? • A binder full of articles and forms you need to get a great start on a state-of-the-art estate plan! • 6 DVDs • 800 number support • Email support

22. Introduction to Ag Estate Planning • In two parts • First section explains the estate planning concepts you need to know. • Second section gives actual demonstrations of how trusts work, how to protect against lawsuits, and much more! Remember, always use specialist professionals to assist you in your estate planning!

23. Gathering and Analyzing Information • You need to know what type of information to gather and why. • Then you’ll learn – from a professional’s point of view – how we analyze your estate for maximum effectiveness. Remember, always use specialist professionals to assist you in your estate planning!

24. Finding A Specialist Attorney • You can’t just open up the Yellow Pages and find a specialist estate planning attorney. • This 45-minute session will show you exactly how to do it. Works with finding other professionals, too! Remember, always use specialist professionals to assist you in your estate planning!

25. Funding Trusts and Entities • Now that you have your trust or legal entity made, you need to “fund” it. • No worries, this shows you how to get your assets into your trust with little effort. Remember, always use specialist professionals to assist you in your estate planning!

26. Settling A Trust Estate • This valuable lesson tells you exactly how to work with your advisor team to settle a trust estate. • Step-by-step instructions both on the DVD and in the manual. Remember, always use specialist professionals to assist you in your estate planning!

27. Family Vision Matrix™ • This DVD is the newest addition to our package. • You will learn exactly how to develop your Family Vision Matrix™ program so it can be administered and provide you valuable input. Remember, always use specialist professionals to assist you in your estate planning!

28. Most effective way to have an honest family discussion – and the family does not even need to be there! Possibly the most important component of the entire system. Nothing is more important than the people in the estate plan. Helps the parents get a clear look at how everyone is thinking. Helps identify potential problem areas. Is best way to discuss critical issues without stress.

29. Morrison Family Vision MatrixJohn Morrison How do I envision the use of ranch assets to support John and Donna in their retirement years. How do I envision the continued operation if John and Donna are not able to contribute work. How do I envision the operation in the event John and Donna need long term care. How do I envision which parts of the place should be sold and which parts should be inherited by the Morrison children. If I were to receive my inheritance in life insurance cash instead of land, would I be in favor of that?

30. Morrison Family Vision Matrix Fictitious Family – Any resemblance to any other person or family is purely coincidental. Want to get the debt paid down. Maybe some expansion in the future if all agree. John and James will work together with each having specific responsibilities. Get the debt paid down. We need to work on some sort of formal change of ownership. James and John working together, but eventually James taking over. Operate as normal and after dad and mom are gone, split it in two for each of us boys. We’ll want to do some traveling in retirement, but do not want to jeopardize profits to do so. James will have to purchase some shares from us so we can have a retirement. Ranch income should give mom and dad some support if the ranch is profitable, but we should not sell assets to support their retirement. At this time the ranch pays all of their expenses anyway, so it should not be a big change. Support should be given with some sort of allotment. The ranch should support dad and mom in their retirement, but hope they do not sell assets to pay for their retirement. James can take over. He may be able to pick up a hired man or two. I am sure Will won’t come back. I don’t think Jenna is interested in helping out. James will make the decisions and operate the place. Hopefully, the grandchildren will be old enough by then to help out. I would have to hire some help. There is no way I will work with Will if he tries to come back. I would be willing to help out in any way I can. I invite the opportunity to contribute on a daily basis. At this time, I could not consider coming back, but as a shareholder, would want some input as to how the place is run. We have long term care insurance to handle that. I would hope they have nursing home coverage. The ranch would always support John and Donna if affordable. I sure hope they have that covered by insurance. We have insurance.

31. Results • Younger generation are purchasing for in-charge generation to approach the topic. • Families are sharing the product to get everyone on the same page. • Increasing estate planning knowledge to streamline and make the process far less complicated. • Rural families have on-demand information.

32. For less than the cost of one hour with a good estate planning attorney!

33. Sustaining the Legacy • Session 2 • Introduction to Identify Ranch Vision and Goal Setting • Homework • Create a Vision

34. Homework

35. Sustaining the Legacy • Session 3 • Identifying the Ranch Vision and Setting Goals • GAP Analysis • Homework • Implement the Plan

36. GAP Analysis

37. Sustaining the Legacy • Impacts • Short term • 100% indicated the workshop was beneficial • 50% completed Personnel, Wealth and Management Inventory by the end of the workshop • 38% had conducted a Family Business meeting by the end of the workshop

38. Sustaining the Legacy • Impact • Medium-Term • Within 6 months they plan for the following: • 75% would have their Personnel, Wealth and Management Inventory Completed • 75% would have a ranch vision • 50% would have an estate plan in place

39. Sustaining the Legacy • Impacts • Long-term • 75% would like to have a completed estate plan within a year

40. Sustaining the Legacy • Personal Impact • Family Meeting at Christmas • Parents only had will • Family Vision Matrix • Parents attended Estate Planning Meeting in CO • Met with attorney and put together a Revocable Living Trust • Much more comfortable with the future!

41. Sustaining the Legacy • Participant Comments • “I realize how important estate planning is now.” • “There really is a gap from where we are now to where I need to be.” • “A will is not enough. It is a supplement.” • “These are deep thought questions. We need a kick in the butt to get it done, but it is hard to write it down.” • “We are serious about estate planning, but how do we get started and involve our children?”

42. Questions? https://moneyconnect.tamuk.edu/C20209_ustores/web/product_detail.jsp?PRODUCTID=20