New England “Transfer the Farm” Workshops

1. New England “Transfer the Farm” Workshops Bob Parsons Deb Heleba University of Vermont

2. Regional Support Project With…. • Northeast Center for Risk Mgmt Education • Extension of Vermont, Maine, New Hampshire, and Connecticut • Land Link – New England, Vermont, and Maine • Cooperating attorneys • Workshops held in 5 New England states • Ongoing for past 3 years

3. Need for Farm Transfer Assistance Crosses State Lines • Survey - major concern of 40% of Vermont dairy farmers • Complicated by high real estate values – MA, CT • Concern in region to preserve farmland • Conservation easements, • Development rights • Complex – 2 different issues • Estate Planning • Business transition

4. Workshop Agenda for Workshop • Communication and setting goals • Retirement, estate & business basics • Nuts & bolts – Legal aspects & methods • Creative alternatives • First-hand experience

5. Communication – Important Piece • Speaker – Counselor who concentrates on farm families • Stress the need of talking with family • Not necessarily agreement • Approach the goals of each generation • Each generation defines there goals • Aligning goals with farm situation

6. Retirement & Transfer Basics • Overall view of issues • Retirement planning • Determining your estate • Implication of taxes • Methods of transferring assets • Business organizations • Business transitions

7. Legal Aspects of Transfers • Attorney with ag estate experience • Probate, estate, and taxes • Wills, inheritance, & heirs • Protecting assets • Picking right business structure • Conflict of interest between generations • FREE QUESTIONS FOR LAWYER!

8. Creative Alternatives • Sell development rights • Selling conservation easement • Land Link – bringing in non-family member

9. First Hand Experience • Farmer panel who have implemented plans Valuable to hear from experienced family • Give success and horror stories • Provides insight on family approaches • Gives courage to move on topic

10. Who Attended…… • 5 states - 228 ’03, 252 ’04, 163 ‘05 • Age distributed: 13% < 35, 29% >65 • 59% male, 41% female • 64% sole proprietor, 20% partnerships • 67% have retirement account • 18% wrote/updated will in past 5 yrs

11. Workshop Increased Understanding of the Issues… • Communication issues from 30% to 85% • Retirement planning from 19% to 71% • Estate planning process from 18% to 78% • Business organization options • From 12 to 71% • Instructors effectiveness above 75% • Satisfaction with workshop at 99% • Note: on a scale of 1 to 5, answer 4 or 5

12. Conclusions from TTF-I • Workshops very effective and popular • Aids farmers in getting a handle on issues • But leaves a major question… What to do next???

13. Creation of Transfer the Farm II • For farmers who are ready to “do something” • Provide more detailed program Problem is… What exactly to present and how to present it?

14. In 2004 – Trial Run • 2 workshops with out of state speaker • Mailed brochures to previous participants • Attendance 48 • Evaluations good but… • Agenda was too much • Strong on retirement planning and health care • Weak on business structure and transition

15. Primary Comments… • Want transition approach • How does a complex plan work? • How to the pieces fit together? • Want details but… • Most farmers want “fill in” plan!

16. Revising Program for 2005 • Outside legal speaker • Planning 3 workshops • Focus on business transition • Use of decision case approach • Walk through a farm transfer • Incorporate audience comments

17. Agenda for 2005 Workshops • Introduce 2 case farms • Review assessment of retirement income and health needs • Review and compare business structures • Develop plans for cases • Now, 5 yr, 10yr

18. Audience Participation a Key Part • Agenda focuses on developing a LLC • Evaluate needs now and in future • Ask audience for suggestions • Farmers will see an example of • Developing a LLC agreement • Incorporate key elements • Incorporate changes as needed • The process for a 15 year transition

19. 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

20. Points of Particular Interest • Key elements of agreement for • Divorce • Controls • Passing ownership through the LLC • Does it really protect against liability • Protecting against the “piercing the veil”

21. Next Program Involvement of NECRME Project • Set up farm visit with farmers planning transfer with extension/lender/counselor • Provide payment for travel • Aid contacting professional (lawyer, acc’t) • $150 stipend • Provide guidance to farm by phone • Goal of 55 throughout New England

22. So What Have We Learned? Farm transfer remains major concern Various issues Business transition Estate planning to reduce taxes Need assistance of professionals Task complex but can be accomplished New England Must take regional approach

23. Conclusion… There are many ways to get there But all require on basic step… …at some point you must stop procrastinating and put a plan in action!!!