Farm Transition & Estate PlanningProgramming:

Participant Behavioral Change, Cumulative Outcomes & Impacts

2004 - 2010

Gary A. Hachfeld

Extension Educator – Ag Business Management

NCRME Conference

St. Louis, MO.

April 11-13, 2011

Program Goals

• Introduce farm/ranch families to business transition & personal estate planning laws, rules, terminology, etc.

• Outline strategies & procedures they might consider using when developing & implementing a business transition & personal estate plan.

• Farm/ranch family take new knowledge and confidence and develop & implement a business transition and personal estate plan.

Delivery, Materials & Marketing

• Face-to-Face workshop setting – PowerPoint slides

• Workbook:

- PowerPoint slides

- 26 detailed information sheets

- Participant worksheets

- Internet resources

• “Sponsorship Model”

- Market to local business sponsors

- Sponsor pays us a program fee; selects date, time,

location; recruits participants; pays all additional costs.

Program Outline

• Topics discussed:

- Preparing to transition the farm/ranch business (goals)

- Tax considerations

- Overview of business transition strategies

- Financial considerations

- Estate planning issues

- Treatment of heirs

- Financial assistance

- Developing a written transition plan

Program Evaluative Process

• End-of-Meeting evaluations:

- Each participant is asked to complete a one page

evaluation following each workshop:

♦ Focus on increased understanding of key educational points.

♦ Status of business transition & estate planning.

• Follow-up evaluation six months following last workshop:

- Mailed to participants with return envelope:

♦ Focus on progress toward developing & implementing business transition and personal estate plan.

♦ Obstacles and challenges encountered.

Participant Demographics2004 - 2010

• Programs delivered in MN, ND, IA, & WI.

• 3,258 total attendees

• 1,537 farms/ranches represented

• 1,031 local communities represented

• 138 local program sponsors involved

• 84.5% had no business transition plan

• 69.6% had no personal estate plan

• Age range: 22 to 89 yrs., 58.1% over age 55

• 62.3% male and 37.7% female

End-of-Meeting EvaluationCumulative Results

2004 - 2010

Participant’s Self-Reporting Whether Their Understanding of Educational Points Increased Due to

Attending a Workshop (2004 – 2010)

Educational PointsMedian Score

AverageScore

StandardDeviation

% Indicating“Strongly Agree”

Or “Agree”

Understanding of the need for clear goals & communication in the transition process.

5 4.52 0.52 99.1%

Greater understanding of strategies available for use in the transition process.

4 4.28 0.53 95.6%

Importance of assessing the financial strength of the business before the transition.

5 4.45 0.58 93.9%

Greater understanding of tax issues related to the transition process. 4 4.20 0.62 88.3%

Greater understanding of personal estate planning issues. 4 4.25 0.61 93.8%

Used Likert Scale with 1 = “Strongly Disagree’ to 5 = “Strongly Agree”

Follow-up EvaluationCumulative Results

2004 - 2010

Percent/Number Farm/Ranch Units Starting/Completing Business Transition & Personal

Estate Plan (2004 – 2010)

Years/States

Task

2004-05(MN)

2005-06(MN)

2006-07(MN)

2007-08(MN, ND,

IA, WI)

2008-09(MN,

ND, IA)

2009-10(MN,

ND, IA)

TotalBusinesses

Started BusinessTransition Plan

58.8%(37)

59.4%(57)

61.8%(84)

72.9%(77)

67.2%(65)

68.5%(63) 383

Completed & Implemented Business Transition Plan

11.6%(7)

12.5%(12)

12.2%(16)

15.7%(16)

22.2%(21)

27.0%(17)

89

Started Personal Estate Plan

56.9%(35)

57.3%(55)

67.2%(92)

79.2%(83)

70.2%(68)

65.2%(60) 393

Completed & Implemented Personal Estate Plan

6.5%(4)

7.3%(7)

14.4%(19)

17.1%(18)

23.4%(22)

26.7%(16)

86

Asset Valuesfor

Economic ImpactCumulative Results

2004 - 2010

Average Asset Values Farm/Ranch & Non-Farm/Ranch Assets by Year

(2004 – 2010)

AverageAsset Values

2004-05 2005-06 2006-07 2007-08 2008-09 2009-10

BusinessAssets

$1,147,163 $1,277,059 $1,401,775 $1,475,454 $1,680,086 $1,689,609

Non-BusinessAssets

$144,561 $160,240 $173,344 $169,737 $172,990 $187,714

Data Source: 1- FINBIN Data Base, Center for Farm Financial Management, U of M , St. Paul, MN. 2- Iowa State University Farm Business Summary

Economic ImpactCumulative Results by Year

2004 - 2010

Economic Impact Due to an Orderly Process for the

Transition of Farm/Ranch & Non-Farm/Ranch Assets

Asset Type & Totals

2004-05 2005-06 2006-07 2007-08 2008-09 2009-10

Business Assets $8.0 mil $15.3 mil $22.4 mil $23.6 mil $35.3 mil $28.7 mil

Non-Business Assets

$0.6 mil $1.1 mil $3.3 mil $3.1 mil $3.8 mil $3.0 mil

Total Business& Non-Business

Assets

$8.6 mil $16.4 mil $25.7 mil $26.7 mil $39.1 mil $31.7 mil

$148.2 Million DollarsProgram Impact

Based Upon Having ImplementedAn Orderly Process For

Asset Transition To The Next Generation

What Have We Learned?

◘ Program demand continues to grow.

◘ “Sponsorship Model” works well for us.

◘ “Sponsorship Model” has strengthened our working relationships with local businesses, leading to other opportunities.

◘ Works very well not having attorneys present material.

◘ Participants state the workbook is a valuable resource.

◘ Evaluative data shows participant behavioral change based upon knowledge increase of subject matter (outcomes).

◘ Evaluative data shows significant economic impact resulting from the program effort (impacts).

Contact Information

Gary A. Hachfeld

Extension Educator

Agricultural Business Management

University of Minnesota Extension

507-389-6722

hachf002@umn.edu

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