Impact of New England Transfer the Farm Program Workshops

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

2. 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

3. 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!

4. What Did We Do 2005-2008? • 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

5. 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

6. 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

7. 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!

8. 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

9. 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

10. 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!

11. 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

12. 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?

13. So What Were the Results??? • Sex: 53% male, 47% female • Age well distributed: • 10% < 35, 25% >65 • 30% age 56-65, 34% age 36-55 • 61% sole proprietor, 19% partnerships • 20% LLC, Trust, Corp • 71% have retirement account

14. 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

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

16. 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

17. 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 2005-2008 • Across New England • By 5 participating extension and 2 non-profit collaborators

18. 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

19. 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)

20. 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

21. 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?

22. Questions? Thank You!