Lessons Learned from Estate and Transition Planning Workshops

2015 Risk Management Education ConferenceApril 29, 2015 Bloomington, Minnesota

Jason Johnson and Blake BennettTexas A&M AgriLife Extension

Estate and Transition Planning

Workshop for Agricultural Producers

Purpose of the Workshop

• Introduction to Estate, Retirement, and Transition planning issues relevant to agricultural producers

• Establish an outline of strategies and procedures to consider when developing or updating your Estate/Retirement/Transition plan

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The Goals for the Workshop

You leave with knowledge and confidence to assist you to . . . .

• Compile & review your own information….

• Communicate an outline to your professional team…. and

• Create or modify a transition / estate plan that is right for your circumstances.

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Participants of the Workshop• 154 participants attended the Estate and Transition Planning Workshops at Abilene,

Stephenville, Fredericksburg, McKinney, and Waco.

• Attendees represented 357 family members, partners or shareholders who also had a working interest in the operation. The aggregated management tenure on the present farm/ranch by participants was 5,440 Years.

• 87% of Farms/Ranches were individually or family owned; 7% were partnerships, 3%

LLC's; 2% Corporations; and 1% Trusts.

• 18% of Farms/Ranches had been in operation for less than 10 years; 24% had operated for 11 to 29 years; 27% had operated for 30 to 49 years; 31% had been in operation for over 50 years.

• Average age of attendee was 64.5 years of age with 4% under 44; 40% between 45 and 64; 36% between 65 and 74; and 20% over age 75.

Property Holdings of ParticipantsParticipants owned/managed 77,970 acres in 58 Texas

counties as well as properties in Oklahoma, Iowa, and Colorado.

Pre-Workshop Actions/Attitudes

• PRIOR TO ATTENDING THE WORKSHOP:

85% had a Will.63% had Power of Attorney forms granting permission to act on their behalf. 64% had Medical Directive to Physician documents.

• Most Important Estate Planning Objectives among a list of five alternatives:

31% Maximize wealth to be passed to heirs.23% Keep land holdings intact / preserve the family's agricultural legacy.21% Ensure the financial well being of a surviving spouse/family member.20% Avoid family strife by distributing property equitably among heirs.5% Maintain privacy of personal assets and minimize administration costs.

Estate and Transition Planning Workshop

for Agricultural Producers

Workshop Agenda• Estate Planning Basics • Lunch and Case Study Discussion• Estate Planning Basics (continued)• Retirement Planning Basics • Transition Planning Basics

On Your Memory Stick

On Your Memory Stick

Workshop Results

• AS A RESULT OF ATTENDING THE WORKSHOP: 98% indicated they are more familiar with estate planning terminology.94% indicated they are more likely to communicate their estate plans with family.89% indicated they know the actions needed to minimize their estate subject to probate.98% indicated they understand who should be included in their estate planning team.98% indicated they know what information they need to compile to discuss estate

planning with their professional team.78% indicated that they know if they face potential estate/gift tax concerns.73% indicated that they plan to visit with their attorney to revise/modify their Will as a

result of what they learned at the workshop.84% indicated that they plan to review their retirement income needs and the reliance on

the farm/ranch to meet them.54% indicated that they plan to review their (life, Health, Long-Term Care, etc.) insurance

coverage.

Which resources are you most likely to use in completing or developing your plans?

• Participants were provided with a workbook, USB memory stick with all presentations and additional resources, checklists, and worksheets to assist them in completing and implementing their Estate and Transition Plans.

81% Estate Plan Checklist75% Trust/Will Review Checklist66% Transition and Estate Planning Goals Prioritization64% Estate Planning Questionnaire56% Fair vs. Equitable Treatment of Heirs Exercise46% Financial Emergency Preparedness Record Keeping File45% Integrated Balance Sheet and Net Worth Worksheet43% Farm Transfer Plans Worksheet34% Retirement Income and Expenses Worksheet33% Transition Plan Goals Clarification Worksheet30% Succession Planning Self Assessment29% Long Term Care Insurance Assessment Tool22% IRA Plan Alternatives Summary19% Life Insurance Needs Assessment Worksheet

4 Month Follow up Survey Results43% response rate of workshop participants

95% indicated that they were making progress in using and implementing the information gained in their individual plans.

88% of respondents indicated that they were more comfortable about the status of their estate/transition plans;

88% had taken a detailed inventory of the value of their estate;

85% had reviewed their retirement income needs and sources of income;

62% had reviewed their insurance coverage;

56% had met or scheduled a meeting with an attorney; and

79% of respondents indicated that they still had some work to do to complete their estate/transition plans.

Questions on the Mind of Many Farm Families…

Are we creating a legacy or a burden by passing the

agricultural operation to our heirs??

Do we want to pass the family farm/ranch business to heirs as an ongoing business or as

a group of assets??

Fair vs. Equal

• Issues of fairness

• Topic best suited for couples/family stakeholders• Materials/Delivery concessions for Older audiences

(paper and digital formats)• Circular seating to accommodate discussion• Multi-sourcing content• Working Lunch – the power of food• Role of Extension – objective provider of knowledge• Potential Partners – drooling to gain access to

participants