A Family Legacy: Succession
Planning for Ranch and Farm
Owners
A Video Tutorial and Facilitated Workshop
Bart Eleveld
Extension Economist
Oregon State University
RMA Commodity Partnership
Agreement ’07-’08
• Oregon Cattleman’s Association was commodity
partner
• Livestock emphasis, but farmers also attended
• Phase I, Workshop series:
– 2, 4 ½ hour workshops in January and April
– 5 locations: Eugene, Prineville, Burns, Baker City &
Klamath Falls
• Phase II, DVD tutorial/facilitated workshop
Workshop 1
• Focused on the need for succession planning
• Challenges of family communication
• Introduction to the case study family and valuing
their legacy
– Balance sheet
• Some simple management strategies
• Building a “team” of experts
Workshop 2
• Reviewing the case study family
– Prospects for future multigenerational success:
income statement and cash flow
• Expert advisors talk about succession planning
tools
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Charitable remainder trusts
Accounting and Appraisal tools for valuation discounts
Legal tools: Wills, trusts and buy-sell agreements
Charitable contribution tools: remainder trusts
Conservation easements and trusts
DVD Tutorial/facilitated Workshop
• Dual purpose
– Facilitated workshop series utilizing local succession
planning experts.
• DVD takes care of formal presentations
• Local advisors answer questions and lead discussion
• Let participants know there are local resources to turn to.
– Self study tutorial
• Producers can do self-paced learning
• Web site lists additional background material including more
detailed statewide workshop presentations, programs
available in other states.
Facilitated Workshop
• Ideally would allow local facilitator to direct
a two (or more) session workshop series
– First session stresses the need, importance
and challenges of succession planning
• Uses dramatized scenario of case study family to
personalize the situation
• Has audience participation/involvement exercises
that can stimulate discussion and can be done as
“homework” assignments for second session
Goals/Objectives and Challenges
A Family Legacy: Succession Planning for Ranch and Farm Owners
Activity #1: Succession Goals/Objectives
Name(s):______________________________________________________________
Business Name:________________________________________________________
Relationship(s):________________________________________________________
(e.g. your relationship to owner(s) and business)
Long term goals:
Under ideal circumstances, what do you hope for the future of this business and/or
its assets in:
10 years?
20 years?
30 years?
After you’re gone?
What major challenges or obstacles stand in the way of meeting goals?
What short term goals (1-5 years) do you have for realizing a succession plan?
From whom (which type of experts) do you think you need help the most?
Heirloom/Lifestyle Scales
A Family Legacy: Succession Planning for Ranch and Farm Owners
Activity #2: Rating Your Assets on the
“Heirloom” Scale
Name(s):______________________________________________________________
Business Name:________________________________________________________
1 = My property is one of the
financial assets in my portfolio
and nothing more.
10 = My property is a priceless
heirloom to be protected for
future generations at all costs.
Please write your thoughts about the long-term purpose of your assets. (Turn the
page sideways if it is easier to write that way)
1
2
3
4
Additional thoughts about “legacy”:
5
6
7
8
9
10
Balance Sheet
A Family Legacy: Succession Planning for Ranch and Farm Owners
Activity #3: Valuing the Legacy
(Balance Sheet)
Please try to categorize the things that you own (assets) and how much you owe (liabilities). If you haven’t
prepared a balance sheet before, or had someone do it for you, this may be an approximation. The purpose is for
you to begin to appreciate the magnitude of your estate, and what it’s composed of. If you prefer, you can do
separate sheets for major components of your family business, or you can separate business and personal. See our
website for an Excel spreadsheet that will allow you to do a more complete balance sheet.
Things you own: Assets
Current (≤ 1 year life, e.g., cash, bank
Value
Amounts you owe: Liabilities
Current (due in ≤ 1 year, e.g., notes and accounts
accounts, product inventory, supplies, accounts
and short-term notes receivable, etc.)
payable, operating loans, credit card balances, accrued
interest and taxes, optional: current year’s principal on
non-current debt)
Total Current Assets
Non-Current (≥ 1 year life, e.g., durable
Total Current Liabilities
Non-Current (due in ≥ 1 year, e.g., term loans on
capital like machinery, equipment, breeding
livestock, capitalized perennials, buildings, land,
improvements)
durable capital, mortgages, notes and contracts on real
estate, etc.)
Total Non-Current Assets
Total Assets
Total Non-Current Liabilities
Total Liabilities
Net Worth (Total Assets – Total Liabilities)
Value
Succession “Team” Structure
A Family Legacy: Succession Planning for Ranch and Farm Owners
Activity #4: Succession “Team” Structure
or Organization Chart
Skybox: Who Are the Owners?
Sideline:
Who are
Attorneys
the
Accountants
/Tax
Planners
Investment
Advisors
Appraisers
Business
Consultants
/ Advisors
Others
(Facilitators,
Mediators,
Counselors)
Experts
or
Coaches?
The Field: Who are the Players—persons involved in the management and operation of the business or
who might be potential owners in the next generation (write sideways)
G
10
20
30
40
50
40
30
20
10
G
Support Staff and Fans: People important to the business, may or may not be future owners, but need
to be informed and consulted to varying degrees (spouses ???, younger relatives, key employees, etc.)
– Second session turns to “tools of the trade” that
producers might use in their succession plan
• Uses presentation by “experts” to give an overview of some
of the methods and instruments. Relate to the case study
where possible to have a unifying thread.
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–
–
–
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Attorney
CPA
Investment and Insurance Advisor(s)
Business management consultant(s)
Communication mediator/facilitator
Conservation easement representatives
“Head coach”
• Need to stress the “teamwork” aspect